Retirement income: Understanding distribution rules and taxation
When it’s time to withdraw money from your employer plans and IRAs, understanding the distribution rules and learning about retirement distribution strategies can help you make informed choices.

To cover essential and lifestyle expenses in your retirement, you'll likely begin drawing some income from your retirement accounts.
However, before you begin withdrawing funds, it's important to do some retirement distribution planning to understand the rules governing distributions.
In this article, you'll learn about:
When can you withdraw distributions? | To take distributions from most 401(k), 403(b), 457(b) and profit- sharing plans, you generally must leave your job (separate from service) or reach age 59 ½. |
When will you face a penalty for withdrawing distributions? |
A 10% IRS penalty may apply to taking early distributions from most retirement plans. Note: 457(b) plans don't carry this penalty.
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How are distributions taxed? | Distributions are generally taxable as income. However, you can take tax-free distributions from a Roth IRA if you've participated in the plan for at least five years and reached age 59 ½. |
What is the age you’re legally required to withdraw distributions? |
Most plans require that you start taking required minimum distributions (RMDs) by April 1 of the year following the calendar year you reach your RMD age, regardless of whether you remain employed. The RMD age is 73 for individuals who turn 72 after 2022. Individuals who turned 72 prior to 2023 are already subject to RMDs. In 2033, the RMD age will increase to 75. These distributions are based on your life expectancy and your account balance at the end of the previous year. RMDs are usually taxable, and there is a 50% penalty on the amount not taken if you skip them or take less than the required amount. |
How are distributions taxed? |
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IRA/SEP IRA |
Note: If both pre- and after-tax contributions have been made, distributions are taken from both proportionally.
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SIMPLE IRA |
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Roth 401(k), Roth 403(b) |
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What is the penalty for early withdrawals? |
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IRA/SEP IRA |
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SIMPLE IRA |
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Roth 401(k), Roth 403(b) |
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Do required minimum distribution (RMD) rules apply? |
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IRA/SEP IRA |
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SIMPLE IRA |
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Roth 401(k), Roth 403(b) |
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How are distributions taxed? |
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401(k), 403(b), Profit Sharing, Defined Benefit |
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457(b) |
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Roth 401(k), Roth 403(b) |
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What is the penalty for early withdrawals? |
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401(k), 403(b), Profit Sharing, Defined Benefit |
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457(b) |
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Roth 401(k), Roth 403(b) |
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Is there a required minimum distribution (RMD)? |
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401(k), 403(b), Profit Sharing, Defined Benefit |
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457(b) |
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Roth 401(k), Roth 403(b) |
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Get help with distributions
Deciding how and when to take distributions from your retirement plans is an important decision for many retirees. An Ameriprise financial advisor can help you evaluate your options and decide on an approach that appropriately serves your particular needs.

Find answers to your retirement questions
Or, request an appointment online to speak with an advisor.
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