Saving for Retirement
Required Retirement Plan Withdrawals
You may hope to leave your nest egg in your 401(k) and IRAs for as long as possible so it will continue to grow, but you will be required to start taking withdrawals when you reach age 70 ½. Those withdrawals are called a Required Minimum Distribution, or RMD. How much you are required to withdraw is based on life expectancy: Currently you will be required to withdraw funds based on living for 27.4 additional years. So, if your 401(k) plan has a balance of $100,000, divide $100,000 by 27.4. The result, $3,649, is the amount you will be required to withdraw each year.
So while you may hope to leave your retirement funds intact for as long as possible, at 70 ½ you'll have to start accessing those funds regardless of your intentions. So plan ahead!