The Tax Office allows funds in development-eligible retirement accounts to be tax-free as long as the money is still in the account. However, the IRS does not allow funds to stay in the account indefinitely. Once you reach every 70 1/2, you must start receiving the Minimum Required distributions from all retirement accounts except the Roth IRA. The number of distributions depends on your account value and age.
Contact the financial institutions that hold your retirement account for the value of your account on the last day of the previous year. For example, if you’re calculating your required minimum distribution for 2012, you’ll need to know your account value as of December 31, 2011.
Use the appropriate IRS distribution table to find the distribution period for your account (see Resources). Most people use Table III, the Unified Survival Time table. However, if your spouse is 10 years younger than you, use Table II, the Co-living table, and the Final Survivor Projected. If you inherit a retirement account, use Table I, Single Life Expectations.
Divide the value of your retirement account by the expected distribution period to calculate your required minimum distribution. For example, if your retirement account is worth $340,000 and your distribution period is 24.7 years, you’ll split $340,000 by $24.7 to see that your mandatory minimum distribution will be $13,765.18.
Your financial institutions will notify you at the beginning of the year if you are asked to allocate from your account.
You will have to pay a 50 percent penalty for the amount you do not withdraw if you do not make the minimum distribution at your request.
What you need
IRS Publication 590