Is There a Right Age to Start Taking Money from Your Retirement Accounts?
Taking money from your IRA or 401(k) at the wrong time can cost tens of thousands of dollars in unnecessary taxes. Most people assume there's one perfect age to start withdrawals. There isn't. The timing affects your tax bill, your retirement income, and how long your money lasts.
Some retirees pull money out too early and create tax problems they didn't anticipate. Others wait too long and get hit with a much larger required distribution later. In this video, we walk through the key ages, the biggest mistakes, and a simple framework for deciding when to start.
Withdrawal timing connects directly to how your retirement tax picture is structured. You may also find our video on the retirement tax mistake most people miss helpful for understanding how account structure and withdrawal order affect your overall tax bill.
The Two Key Ages That Define Your Withdrawal Window
Two ages define the boundaries of your withdrawal decision. Understanding both is where the planning starts.
Age 59 and a Half: When You Can Start Without Penalty
Age 59 and a half is when you can generally start taking withdrawals from your IRA or 401(k) without the 10% early withdrawal penalty. But just because you can doesn't mean you should. The ability to withdraw penalty-free is not a signal to start withdrawing. It's simply the removal of one constraint. Whether it makes sense to start depends on your tax situation, other income sources, and long-term plan.
Age 73 or 75: When Required Minimum Distributions Begin
Required minimum distributions are mandatory annual withdrawals from tax-deferred accounts. Under current law, the start of required minimum distributions is generally age 73, or age 75 if you were born in 1960 or later. Missing a required distribution carries significant IRS penalties.
The Gap Years Between Retirement and Required Distributions
One of the most valuable and most overlooked planning windows is the period between when you retire and when Social Security and required minimum distributions both begin. During those years, your income may be temporarily lower than it will be once all sources are active.
Say you retire at 65, delay Social Security until 70, and required distributions don't start until 73. That's potentially eight years where your income is lower and your tax bracket is more favorable. Taking strategic withdrawals from your IRA during those years, rather than waiting for required distributions to force the issue, can meaningfully reduce what you pay in taxes over your lifetime.
If you're in the 12% bracket during those gap years versus a 24% bracket once required distributions and Social Security are both layered in, the difference in lifetime tax cost can be substantial.
For a deeper look at how Roth conversions can make use of this window, see our video on how much is too much when converting to Roth before required distributions begin .
Three Things to Think Through Before Deciding When to Start
Your Tax Situation
What bracket are you in right now, and what bracket will you be in once Social Security and required distributions are both active? If there's a meaningful gap, the lower-bracket years are often the right time to draw strategically from tax-deferred accounts rather than letting the balance grow into a larger forced distribution later.
Your Other Income Sources
Social Security, a pension, rental income, a taxable brokerage account. The more income sources you have, the more flexibility you have to choose where this year's income comes from. That flexibility is what makes withdrawal sequencing a genuine planning opportunity rather than a fixed decision.
Your Long-Term Plan
The goal isn't getting through this year. It's building income that may need to last 20 to 30 years while managing taxes the whole way. A withdrawal strategy that optimizes for the current year without accounting for the full retirement horizon often creates problems later that were entirely avoidable.
For a broader look at how withdrawal order and account type interact, see our video on why account type matters as much as account balance in retirement .
Frequently Asked Questions About IRA and 401(k) Withdrawal Timing
When should I start withdrawing from my IRA or 401(k)?
There isn't one universal right answer. The timing depends on your tax bracket, other income sources, Social Security strategy, and long-term income plan. For many retirees, the most tax-efficient approach involves strategic withdrawals during the lower-income years between retirement and the start of required minimum distributions, rather than waiting for required distributions to force larger taxable withdrawals later. The goal is coordinating withdrawals with your full income picture, not simply choosing the earliest or latest possible age.
What is the penalty for withdrawing from an IRA before 59 and a half?
Withdrawals from a traditional IRA or 401(k) before age 59 and a half generally trigger a 10% early withdrawal penalty on top of ordinary income tax on the amount withdrawn. There are exceptions for certain situations including substantially equal periodic payments, disability, first-time home purchase for IRAs, and others. The penalty applies to the taxable portion of the withdrawal, which for traditional accounts is typically the full amount since contributions were made pre-tax.
When do required minimum distributions start?
Under current law, the start of required minimum distributions depends on your birth year. For most people currently in or approaching retirement, required distributions begin at age 73. If you were born in 1960 or later, that age moves to 75 under SECURE 2.0 rules. The amount you must withdraw each year is calculated based on your account balance and IRS life expectancy tables. Missing a required distribution carries a significant penalty. Required minimum distributions apply to traditional IRAs, 401(k)s, and most other tax-deferred retirement accounts. Roth IRAs are not subject to required minimum distributions during the account owner's lifetime.
Should I delay IRA withdrawals as long as possible?
Not necessarily. Delaying withdrawals lets your money keep growing tax-deferred, but it also means your account balance keeps growing, which increases the size of your eventual required minimum distributions. If those distributions push you into a higher tax bracket or increase the taxable portion of your Social Security benefits, the tax cost of waiting can outweigh the growth benefit. For many retirees, taking strategic withdrawals in the lower-income years before required distributions and Social Security both begin produces a better lifetime tax outcome than delaying as long as possible.
How does IRA withdrawal timing affect Social Security taxes?
IRA withdrawals count as income in the year you take them and are included in the combined income formula the IRS uses to determine how much of your Social Security benefit is taxable. The more IRA income you take in a year when you're also receiving Social Security, the more of your benefit may become taxable. This interaction is one of the reasons withdrawal sequencing matters. Taking more IRA income in years before Social Security begins, when the two don't stack, can reduce the lifetime tax cost compared to drawing from both simultaneously.
What is the best order to withdraw from retirement accounts?
A common general approach is to draw from taxable brokerage accounts first, then tax-deferred accounts like traditional IRAs and 401(k)s, and leave Roth accounts to grow tax-free as long as possible. However, the right order depends on your specific tax situation each year. In years where your income is low, it may make sense to draw more from tax-deferred accounts to fill up lower brackets. In higher-income years, drawing from Roth or taxable accounts can help manage the overall tax burden. The sequencing should be revisited annually as income sources, brackets, and account balances change.
How do IRA withdrawals affect Medicare premiums?
Medicare Part B and Part D premiums are income-based through a surcharge called IRMAA. The calculation uses your modified adjusted gross income from two years prior. Large IRA withdrawals in a given year can push income above IRMAA thresholds and increase your Medicare premiums significantly starting two years later. This is one of the reasons managing the size and timing of IRA withdrawals matters beyond just income tax. A withdrawal that looks efficient from an income tax standpoint can still trigger a Medicare surcharge that reduces the net benefit.
What happens if I take too much from my IRA too early?
Taking large withdrawals too early can push you into a higher tax bracket in the years when you're also receiving Social Security and pension income, trigger Medicare premium surcharges, reduce the tax-deferred growth your account would otherwise have generated, and potentially create a tax bill larger than necessary if the withdrawals weren't coordinated with your broader income plan. Large early withdrawals also reduce the account balance available for future growth and future required distributions, which can help or hurt depending on your situation. The right approach depends on your full picture, not just the withdrawal amount in isolation.
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Investment advice is offered through Bayntree Wealth Advisors, LLC, an SEC-registered investment adviser. Insurance and annuity products are offered separately through Bayntree Wealth Advisors. Bayntree does not provide, and no statement contained herein shall constitute, tax or legal advice. You should consult a tax or legal professional on any such matters. Opinions expressed herein are solely those of Bayntree Wealth Advisors. All content is for informational purposes only and is not intended to provide the basis for any financial decisions.
Bayntree Wealth Advisors is not affiliated with the U.S. government or any governmental agency, including the Social Security Administration.
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