Understanding the IRA Withdrawal Rules

Updated on January 22, 2009.

You turned 70 1/2 last year

Took First Minimum Withdrawal Last Year (2010)

To calculate your 2011 minimum withdrawal, you simply take your Dec. 31, 2010, IRA account balance and divide by the joint life-expectancy figure based on your age at the end of this year. For example, say your Dec. 31, 2010, account balance was $190,000 and you'll be 72 on Dec. 31, 2011. You would divide $190,000 by the applicable divisor, which in this case is 25.6. (Use our calculator to determine your divisor.) The result is $7,422, which is the amount you must withdraw (at least) on or before Dec. 31, 2011.

That said, if your spouse is the sole designated beneficiary and he or she is more than 10 years younger, you'll probably want to do this instead: Use Table II in Appendix C of IRS Publication 590 (Individual Retirement Arrangements) to find your divisor, based on your age and your spouse's age as of Dec. 31, 2011. The good news is this calculated amount will be lower than the result you would get from following the "standard" procedure in the example above. Again, take out the calculated amount (at least) on or before Dec. 31, 2011. (If you wish, you can also choose to keep things simple and use the above "standard" procedure which will produce somewhat higher withdrawals and slightly higher taxes.)

Next year (2012) you must take another minimum withdrawal by Dec. 31, 2012. That amount will equal your Dec. 31, 2011, IRA balance divided by the joint life-expectancy figure based on your age at the end of next year. *Note the required minimum distribution has been suspended for the 2009 tax year. For more information, read our story here.

Will Take First Minimum Withdrawal This Year (2011)
Unfortunately for you, this is the most complicated scenario. Here's what you need to know.

Your initial minimum withdrawal is based on your Dec. 31, 2009 (not 2010) IRA balance and your age at the end of 2010. This first withdrawal must be taken on or before April 1, 2011. Follow the procedure explained above to calculate the amount.

Your second minimum withdrawal must be taken out by the end of this year (2011). Here's the drill for your second minimum withdrawal calculation: Take your Dec. 31, 2010, IRA balance and divide it by the joint life expectancy figure based on your age as of the end of this year (from the calculator below).

For example, say your Dec. 31, 2010, IRA balance was $225,000 and that you'll be 71 as of Dec. 31, 2011. The joint life-expectancy divisor for your second minimum withdrawal is 26.5 years. (To determine your divisor, use our calculator.) So your second minimum withdrawal is $8,491 [($225,000 /26.5]. You must withdraw that amount (at least) by the end of this year (Dec. 31, 2011).

The only time you wouldn't want to follow the procedure explained above for your second minimum withdrawal is when your spouse is designated as the sole beneficiary of your IRA and he or she is more than 10 years younger. In that case, find your life expectancy divisor in Table II in Appendix C of IRS Publication 590, based on your age and your spouse's age as of Dec. 31, 2011. You will find that your minimum withdrawal amount is lower (which is good) than if you use the "standard" procedure explained above. (You can also choose to follow the "standard" procedure if you want to keep things simple.)