IRA Beneficiary
5. Required Beginning Date
This is called your Required Beginning Date. For most of us, this will be April 1 following the year in which we become age 70 1/2. So, for example, if you become 70 1/2 in 2009, your Required Beginning Date will be April 1 of the year 2010.
You may choose to delay your Required Beginning Date until your actual retirement date if you continue working past age 70 1/2 and you do not own 5% or more of the company.
However, this exception only applies to employer-sponsored plans-like pension and profit sharing plans. If you have an IRA, you must start taking money out of it by April 1 of the year following the year in which you become age 70 1/2, regardless of when you actually retire.
Uncle Sam is serious about this date. If you miss it, the penalty is 50% of the amount you should have withdrawn.
NOTE: Although you have until April 1 of the year following the year in which you become age 70 1/2 to take your first distribution, waiting until this date can cause you to take two distributions in one year - because you will have to take another distribution (for age 71) by December 31 of the same year. This could push you into a higher income tax bracket and cause you to pay too much in income taxes.