If you own a tax-deferred retirement account and have reached the age of 70½, federal law requires you to take annual distributions in the form of an RMD. Required minimum distributions (“RMDs”) most commonly are taken from traditional Individual Retirement Accounts (IRA), workplace retirement plan accounts — 401(k)/403(b)/457 — or self-employed retirement plan accounts.

An RMD is also required for IRA-based plans (e.g., SEPs or SIMPLE IRAs) and all employer-sponsored profit-sharing plans. Distributions must be taken from Roth 401(k) accounts as long as the original owner is alive, but not Roth IRAs.

RMDs must be taken for the year in which you turn 70½. Your first RMD can be delayed until April 1 of the following year, but all subsequent distributions are required by Dec. 31. You may start taking distributions later if you work past the age of 70½ as long as you don’t own at least 5% of the company and it offers a qualified retirement plan.

RMDs are subject to federal income tax.

You don’t have to wait until you’re 70½ to withdrawal money from your tax-deferred retirement accounts. As early as age 59½, you’re eligible to take money from them without suffering an early withdrawal penalty of 10%. RMDs are subject to federal income tax as ordinary income. They may also be subject to income tax by your state government.

You’re responsible each year for taking the correct distribution amount from your account on time. You can take more than the required amount, but the extra amount can’t be applied toward your distribution requirement the following year. If you don’t take the minimum amount, the penalty is an excess accumulation tax of 50% of the required amount. So, if you’re required to take $2,000 and don’t do so, your federal tax penalty would be $1,000.

Required distribution amounts are based on your age and year-end values in your eligible accounts.

Typically, distribution amounts are calculated by dividing your prior Dec. 31 balance by your life expectancy factor from one of three tables published by the IRS. If you own more than one qualifying account, you may take RMDs from one or all of them provided you meet your minimum distribution amount.

If you die before taking RMDs, different rules apply to the beneficiary of your account. Generally, the entire value of your accounts must be distributed to your beneficiary within five years of your death or over the life of your beneficiary starting within one year of your death.

Before you make any decisions about taking RMDs from your account, you should contact your financial advisor and tax professional.