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Let It All Go – IRS gives you 11 years… (now 12½ years!)


Photo credit: diedoe

When you were a kid, did you ever dream of being able to just let it all go – not having to follow any rules, no penalties, no restrictions? What if I told you that the IRS provides you with just such an environment – where you are free to literally do (or not do) almost anything you want with your IRA? Including buying yourself that pet camel you always wanted?

So just where is this nirvana? Where you can just go willy-nilly and do whatever suits you with your IRA? It’s not a where, but rather, when.

Between the ages of 59½ and 72 there are no rules or restrictions regarding withdrawals from your IRA – including no required withdrawals. How ’bout them apples?? That’s a full 150 months where you can take money out of your IRA at any time, for any reason, and there are no consequences! Well, the one consequence is that you have to pay ordinary income tax on the tax-deferred withdrawals. You’re also free to not take money out of your account, if you wish – a privilege that you might yearn for after you reach the end of this free-for-all time.

One other thing that comes up during this span of 12½ years: at age 70½, you have the ability to begin making Qualified Charitable Distributions  (QCDs) from your IRA. These can be very useful if you are making charitable contributions anyhow, and you otherwise take the Standard Deduction. It used to be (back in the olden days before the SECURE Act) that you had to be subject to RMDs in order to take advantage of QCDs, but no longer. You just need to be 70½ years of age and you’re all set to take QCDs.

And it gets better if you have a 401(k) – you have from age 55 to age 72 with no restrictions, the only additional requirement being that you have separated from service (left your employer) on or after age 55. And many employers are stepping up and helping folks out with that lately – hardly a day goes by without hearing of someone “separating from service”.

On the other hand, if you’re still employed by that employer, the required minimum distributions don’t apply to you at age 72. Often the employer restricts your distributions while employed (but not always). 

So – when everything seems to be going against you, you can sit back and think about how the IRS has given you this wonderful span of time… eleven full years… with no restrictions.


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