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Retirement accounts are built to be left alone for a long time, and the tax code rewards patience. But there comes a point when you may want to, or have to, start taking money out. Timing matters for both your taxes and your lifestyle.

Before age 59 and a half

Withdrawals from traditional IRAs and most employer plans before this age are generally subject to ordinary income tax and an additional early-withdrawal tax. Exceptions exist for specific circumstances, such as disability, certain medical costs, and some other situations set by law, and some plans allow penalty-free payments under a structured series of payments. Because exceptions are detailed, confirm them before withdrawing. A leave of employment late in your career can also create special rules for the plan of that employer.

After 59 and a half

You may withdraw without the additional tax, though traditional account withdrawals are taxed as ordinary income. You are not required to start yet, so you can choose when to draw based on your needs and tax situation.

Required minimum distributions

At a certain age set by law, you must start taking minimum amounts each year from traditional IRAs and most employer plans. Missing a required distribution can lead to a steep penalty. The starting age has been changed by Congress in recent years, so check the current rule at irs.gov. Roth IRAs do not require distributions during the owner's lifetime. Account owners still working for an employer may be able to delay distributions from that employer's plan, with conditions.

Factors in deciding when to start

• Cash needs: do you need the money to live on?
• Tax bracket now versus later: if you expect to be in a lower bracket early in retirement, taking some taxable income in those years may reduce taxes later when required distributions begin.
• Other income: taking withdrawals can increase the taxable portion of Social Security and affect Medicare premiums.
• Growth potential: money left in the account continues to grow tax-deferred.
• Estate goals: what you leave to heirs, and how it will be taxed to them.

Withdrawal order

A common approach is to draw from taxable accounts first, then tax-deferred, then Roth accounts. It is not right for everyone. Blending withdrawals across account types can smooth your tax bill from year to year.

Plan ahead

Look at your projected income and required distributions several years before you reach the required age. Early planning, such as partial Roth conversions in lower-income years, can reduce the burden later.

To work out the best timing for your accounts, reach out to our firm and we will look at your numbers together.