A:

Congratulations on retiring at the young age of 59! You may withdraw assets from your SIMPLE IRA at any time, and there is no maximum or minimum restriction on the amount you can withdraw; rather, withdrawals are optional until you reach age 70 ½. Since you will be at least age 59 ½ when the distributions occur, you will not owe any early-distribution penalties (the 10% additional tax which applies to distributions made before an individual reaches the age of 59 ½). You will, however, owe income tax on the amount you withdraw from the SIMPLE during the year.

When you reach age 70 ½, you will have to begin required minimum distributions (RMDs). At this time, you may distribute the full balance of the IRA or distribute a minimum amount each year. Your IRA custodian will help you calculate the RMD amount. Before you decide to withdraw your SIMPLE balance, you should consult with your financial advisor, who should be able to help you use your SIMPLE IRA balance, along with your other assets, to plan for a financially secure retirement.

(For more on SIMPLE plans, see Introduction To SIMPLE 401(k) Plans and SIMPLE IRA Vs SIMPLE 401(k) Plans.)

This question was answered by Denise Appleby(Contact Denise)

RELATED FAQS
  1. I converted my former IRA to a Roth for tax purposes in 1998, so even though the ...

    Because you are over age 59 ½, you will not owe any early-distribution penalty on any distributions you take from your Roth ... Read Answer >>
  2. Are Simple IRA taxes the same as traditional IRA taxes?

    Discover the tax difference between a SIMPLE IRA and a traditional IRA before you determine which retirement plan is the ... Read Answer >>
  3. Can you make tax-free withdrawals from your 401(k)?

    Find out whether you can take withdrawals from your 401(k) tax-free, including how withdrawals from Roth and traditional ... Read Answer >>
  4. When can I withdraw my IRA money?

    Managing an individual retirement account can be tricky. Find out when you can withdraw IRA money without incurring a 10 ... Read Answer >>
  5. Can I use my IRA to pay for my college loans?

    Learn about how to use your IRA retirement savings to pay for your college loans, including how to avoid the 10% early withdrawal ... Read Answer >>
  6. Can I use my IRA savings to start my own savings?

    Find out whether you can withdraw funds from your IRA to start a savings account, and why this is not the wisest use of your ... Read Answer >>
Related Articles
  1. Retirement

    What's the Tax Hit on an IRA Withdrawal?

    How much taxes you'll pay on IRA withdrawals depends on a variety of factors. Use this guide to plan ahead.
  2. Retirement

    How Much Are Taxes On An IRA Withdrawal?

    Taxes on an IRA withdrawal depend on the type of IRA, your age, and the purpose of the withdrawal.
  3. Financial Advisors

    Tapping Your Retirement Accounts: How to Start

    Deciding which retirement account to tap first can be confusing as it may impact how long your savings last. Here's some help.
  4. Retirement

    How an IRA Works After Retirement

    You've read a lot about saving for your future retirement with IRAs. But what happens to the account when the future is here, and you actually retire?
  5. Professionals

    Individual Retirement Accounts (IRAs)

    Contribution and Distribution Considerations
  6. Retirement

    How a 401(k) Works After Retirement

    Find out how your 401(k) works after you retire, including when you are required to begin taking distributions and the tax impact of your withdrawals.
  7. Saving and Spending

    5 Questions to Ask Before Opening a New Retirement Account

    Know the right questions to ask before opening a new retirement account, such as an IRA, to save money and avoid potential tax pitfalls.
  8. Professionals

    Roth IRAs

    FINRA/NASAA Series 66: Section 4 Roth IRAs. This section discusses Roth IRA in detail and relevant information.
  9. Financial Advisors

    Multiple Accounts? Here's How to Calculate RMDs

    Ever wondered about how to calculate required minimum distributions on multiple accounts? Here's a quick primer.
  10. Retirement

    Your 401(k): Not the Best Emergency Fund

    If you have an emergency and need to access your retirement funds, you may have to pay a penalty if you dip into your 401(k). But there is a better option.
RELATED TERMS
  1. Required Minimum Distribution Method

    One of three methods by which early retirees of any age can access ...
  2. Mandatory Distribution

    The amount an individual must withdraw from certain types of ...
  3. IRA Plan

    A plan that individuals may establish to arrange and plan for ...
  4. Roth IRA Conversion

    A reportable movement of assets from a Traditional, SEP or SIMPLE ...
  5. Individual Retirement Account - IRA

    An investing tool used by individuals to earn and earmark funds ...
  6. Required Minimum Distribution - RMD

    The amount that Traditional, SEP and SIMPLE IRA owners and qualified ...

You May Also Like

Trading Center