Knowing the rules can protect your savings — and reduce your tax bill.Knowing the rules can protect your savings — and reduce your tax bill.

Once you've set up an Individual Retirement Account, it's important to know when you should — and shouldn’t — take money out of it.

Traditional IRA withdrawal rules.

You’re probably aware that dipping into your account prematurely can trigger Internal Revenue Service (IRS) early withdrawal penalties.1 But the IRS rules also require mandatory withdrawals—and mistakes can be costly.2

What's more, unlike with a Roth IRA, once you reach a certain age, you don't have the option of leaving your money in a Traditional IRA. There comes a point when you must begin taking distributions.3


retirement cake graphic

It's all in the timing.

You can begin taking IRS penalty-free distributions from your Traditional IRA at age 59½. You must begin taking them at age 70½. Withdrawing money even a day too early or late could be a costly mistake. Consider these scenarios:

Early withdrawals: The price of jumping the gun.

Generally, any money you remove from your account before you turn 59½ may be subject to ordinary federal income tax and an additional 10% IRS penalty for early withdrawal. Some states also assess penalties of their own.

That said, early withdrawal penalties may be waived under certain conditions.4 Exceptions include:

After 59½ it’s your call.

Once you reach age 59½, you may withdraw as little or as much as you'd like without the threat of IRS early withdrawal penalties. But that doesn’t mean you have to take money out of your IRA or even that you should.

If you're still earning an income, the smartest option may be to leave your IRA alone and let it continue growing tax-deferred. Otherwise, you'll risk depleting your retirement savings, defeating the reason you set up an IRA in the first place. What’s more, you may be taxed at a higher rate than if you had waited until you were retired, when you might be in a lower tax bracket.

Late withdrawals: Why not to miss the deadline.

You have until April 1 of the year after you reach 70½ to take your first Required Minimum Distribution (RMD), and all subsequent distributions must be taken by December 31 of the calendar year. You can calculate your RMD based on a number of factors, such as your age and the balance in your account(s), and you can choose to receive it as a lump-sum payment or as a series of withdrawals. But make sure to meet the deadline and RMD threshold; failure to take your RMD may result in an IRS excise penalty of 50% on the amount you should have withdrawn.

Roth IRA withdrawal rules.

In contrast to a Traditional IRA, contributions to a Roth IRA are made with after-tax dollars, so a different set of withdrawal rules applies:5

IRS penalty-free withdrawals of earnings.

You can begin at age 59½—or earlier if exceptions apply, provided it has been at least five years since the first tax year for which you opened and funded any Roth IRA. (A separate five-year holding period applies to each conversion.)

No required distributions.

There are no RMDs from a Roth IRA. You can leave your money untouched and allow it to keep growing.


You may withdraw your contributions at any time without taxes or IRS penalties. Withdrawals of earnings made before you turn 59½ and meet the five-year holding period may be subject to income tax and a 10% penalty. However, as with Traditional IRAs, exceptions apply.

Money in, money out.

By opening a CIT Bank IRA and contributing to it regularly, you’ll build the foundation for steady retirement income while enjoying tax advantages today. But to reap IRA’s full benefits, make sure to keep an eye on the calendar—and to observe the IRS IRA withdrawal rules.

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