What happens if I don t start taking money out of my retirement account at age 70 1/2?
If you don t start taking money out of your retirement account by the time you reach age 70 1/2, you ll be hit with some extremely serious tax penalties. The Internal Revenue Service will slap you with a 50 percent excise tax on the difference between what you withdrew (if anything) from the account and what you should have withdrawn. On top of that, you ll owe additional excise tax for each year you fail to make the required distribution. For example, if you should have taken $9,000 from the account but didn t take out a cent, you would owe the IRS $4,500 for that year s requirement. If you fail to make the required distribution for the following year, assuming it s $8,000, you will own another $4,000 for that year. And on top of all that, you ll owe regular income taxes on each withdrawal as well!
