There are several rules that apply to withdrawals from your retirement account. Hopefully, if you are taking some distributions it is because you have retired and are using the funds to enjoy your well deserved retirement.

In general, you can start taking distributions without penalty at age 59 1/2 and must start taking distributions by age 70 1/2. In the event that you need funds from your retirement account before age 59 1/2, there are ways to do that without paying the tax penalty. If you retire early and want some funds for income, you can annuitize and take regular distributions without penalty prior to age 59 1/2.

Another way is through loans. If your employer sponsored plan — such as a 401k, 403b or 457 — allows for loans you can access funds that way in the event that you need them prior to retirement. Loans are usually limited to 50% of the account value. Loans are not available from IRA accounts.

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Some retirement plans allow for hardship distributions. Qualified retirement plans are not required to allow for hardship distributions, but many do. If you are facing a hardship, it must be an immediate and heavy financial need. Expenses that typically meet the immediate and heavy need definition include things like medical expenses, tuition, funeral expenses, costs related to the purchase of a principal residence, payments needed to prevent eviction and funds needed for repairs of your principal residence.

Employees will have to show that they are experiencing a hardship and the maximum distribution is limited to the employee’s total elective contributions.

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RMDs or Required Minimum Distributions begin at age 70 1/2. That is the time you must start taking funds from your retirement account. However, if you are still working past that age and have an employer sponsored plan, you don’t need to begin taking distributions until you decide to retire. That does not apply to IRA accounts, where distributions must be taken regardless of whether you are still working.

RMDs are calculated by using a life expectancy table and the amount is usually provided by your broker or advisor. RMDs do not apply to Roth IRAs while the owner is still alive, which can make them a very good estate planning tool.

In the event that you have a need to access your retirement account funds, consult with your plan administrator and tax advisor to see what the best approach is.

Kenneth Roberts is a Truckee-based Registered Investment Advisor. For more information visit http://www.iwcasset.com or call 775-657-8065. The mention of securities should not be considered an offer to sell or solicitation to buy investments mentioned. Consult your investment professional to understand the risks and/or how the purchase or sale of these investments may be implemented to meet your investment goals. Past performance is no guarantee of future results.