A. Given the tax advantages of IRAs and 401(k)s, it’s no surprise that you might want to delay making withdrawals from your accounts for as long as possible.
You can wait until you’re 70 1/2 to start taking your required minimum distributions, and you can even wait until April 1 of the following year. If you were still working at age 70 1/2 and have an employer-sponsored work plan like a 401(k), you can delay RMDs until you actually stop working. (That exception doesn’t apply to business owners.)
Penalties for not taking RMDs are stiff, at 50% of the missed withdrawal amount.
Traditional IRA owners need to take their RMDs at age 70 1/2 regardless of work status to avoid an IRA withdrawal penalty. You can put off taking your initial RMD until the following April, but you still need to take funds for the current year. For example, if you turn 70 1/2 in 2018, you could delay the first RMD until April 1, 2019, but you need to take a second RMD by December 31, 2019 to avoid paying a penalty.
By waiting, you end up doubling up. So that could double up your tax bite as well and put you into a higher tax bracket. The year you turn 70 1/2, you might want to seriously consider not waiting until April.