When it comes to 401k account withdrawal, there are two ages that you need to keep in mind. One is 59.5 years and the other is 70.5 years. When you reach 59.5 years, you can make withdrawals from the account without having to pay any penalties levied by the IRS. However, you should still be prepared for some amount to be withheld by the IRS. This amount constitutes 20 percent of the total amount that you withdraw. This will go towards the income tax payment. However, if you have done some smart tax planning, you can see a refund coming your way.

Once you attain 70.5 years of age, you have to necessarily start taking money from your 401k account. This withdrawal should start from April 1 of the following year after you turn 70.5. In case you fail to withdraw the money, you will be in for a severe shock. The IRS will deduct 50 percent of the minimum distribution requirement as a penalty for not withdrawing. Therefore, even if you do not need the money, you should still take the minimum withdrawal amount and invest it wisely.

Remember, you have to take the distribution in order to qualify. In case you do not take the distribution at the beginning of year, then you would have to take distributions for 2 years the following year. One will be made by April 1 and the other by December 31. If you do not take the distribution for 2 years, the IRS will be waiting round the corner to grab your hard earned money.

However, if you are working even after reaching 70.5 years, then you do not have to take the minimum distribution until you retire. Remember, your work has to be full time and not part time in order to allow your funds to remain in your 401k account.

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