Connecticut Life Producer Practice exam

What is the required minimum age to begin distributions from a Traditional IRA?

1. 59 ½ years old

2. 62 years old

3. 65 years old

4. 72 years old

The correct answer is: 72 years old

The required minimum age to begin distributions from a Traditional IRA is 72 years old. This age is established by the Internal Revenue Service (IRS) to ensure that individuals start withdrawing their retirement savings by a certain age, thus facilitating tax revenue from these accounts. The requirement to start taking minimum distributions, known as Required Minimum Distributions (RMDs), was established to prevent individuals from deferring taxes indefinitely by keeping the funds in an IRA. Before reaching the age of 72, account holders have the option to withdraw funds from their Traditional IRA without penalty but are not required to do so. However, once an individual turns 72, they must begin taking distributions, which are taxable, even if they do not need the funds at that time. The policy aims to encourage retirees to utilize their retirement savings during their retirement years instead of allowing the money to continue growing tax-deferred indefinitely. The other age options do not represent the point at which distributions are mandated under current IRS rules, as they either represent earlier ages where individuals can access IRA funds without penalties but without a requirement to do so.