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IRA Distribution Rules
Generally, you should consider three aspects:
- Early distributions
- No-Penalty normal distributions
- Required Minimum Distributions
You should also be able to understand the rules and requirements for each type before taking a distribution. See the table below.
IRA Distributions
Traditional | Roth | |
|---|---|---|
Penalty-free distributions: | Traditional Begin at age 59 1/2 | Roth On contributions: Always available
On earnings/interest on contributions: Begin at age 59½ when IRA is 5+ years |
Required minimum distributions: | Traditional Begin at 72 | Roth RMDs not required |
Distribution options for your IRA
TD Ameritrade provides several methods for distributing your IRA funds. You can set up automatic distributions, transfer funds to another account or transfer holdings. Find out the features and benefits of each option.
Take a one-time distribution or set up automatic distributions
Transferring funds from your TD Ameritrade account to your bank account is fast and easy. You can take a one-time distribution or set up automatic distributions from your IRA-for early distributions, normal distributions and RMDs.
Use funds directly from your account
If you have reached the age of 59½, you can write checks from your account to facilitate your distributions while managing your bills at the same time. Checks written from your IRA will be normal distributions from your IRA. A normal distribution is a penalty-free, taxable withdrawal.
Transfer assets between TD Ameritrade accounts
When taking required distributions, you may consider transferring funds from your Traditional IRA to a standard brokerage account. There may be additional requirements when transferring between different kinds of accounts.
Tax Withholding
If you request a distribution from your Individual Retirement Account (IRA) and you do not make an election regarding state tax withholding, your state of residence may require withholding at a statutory minimum rate. This information is provided to help you understand state income tax withholding requirements for IRA distributions. TD Ameritrade does not provide tax advice and cannot guarantee accuracy of state tax withholding information as state laws are subject to change and interpretation.
Alabama Allows :
Voluntary State Income Tax Withholding
State income tax will be withheld only if you instruct us to do so. If you want state income tax to be withheld, you must indicate the amount or percentage.
Alaska:
Prohibits State Income Tax Withholding
State income tax will not be withheld from your distribution, even if you elect to withhold state income tax.
Arizona:
Prohibits State Income Tax Withholding
State income tax will not be withheld from your distribution, even if you elect to withhold state income tax.
Arkansas Allows :
A Mandatory State Income Tax Withholding
State income tax will be withheld regardless of federal income tax election, unless you elect not to withhold. If you make no election, Arkansas requires that withholding be taken at the minimum rate of 3.00%.
California Has :
A Mandatory State Income Tax Withholding
State income tax will be withheld regardless of federal income tax election, unless you elect not to withhold. If you make no election, California requires that withholding be taken at the minimum rate of 10% of federal withholding election.
Colorado Allows :
Voluntary State Income Tax Withholding
State income tax will be withheld only if you instruct us to do so. If you want state income tax to be withheld, you must indicate the amount or percentage.
Connecticut Allows :
Mandatory State Income Tax Withholding
Connecticut requires state income tax for all distributions. If you make no election, Connecticut requires that withholding be taken at the minimum rate of 6.99% on distributions from retirement accounts.*
*The state of Connecticut requires 6.99% tax withheld on distributions from retirement accounts. Residents can choose to have a smaller percentage withheld, or opt out of withholding entirely, by submitting a new distribution form and a Connecticut Form W-4P. The forms can be mailed to us at the address shown at the top of the distribution form, or faxed to us at 866-468-6268. Please note that reducing or eliminating this withholding may subject you to underpayment penalties. We suggest you consult with a tax-planning professional for more information.
Delaware Has :
A Mandatory State Income Tax Withholding
State income tax will be withheld regardless of federal income tax election, unless you elect not to withhold. If you make no election, Delaware requires that withholding be taken at the minimum rate of 5.00%.
District of Columbia Has :
A Mandatory State Income Tax Withholding When Federal Income Tax is Withheld
If electing a total distribution, you must elect to withhold state income tax when federal income tax is withheld from your distribution. If you do not make an election, District of Columbia requires that withholding be taken at the minimum rate of 10.75%.
If electing a partial distribution, State income tax will be withheld only if you instruct us to do so. If you want state income tax to be withheld, you must indicate the amount or percentage.
Florida:
Prohibits State Income Tax Withholding
State income tax will not be withheld from your distribution, even if you elect to withhold state income tax.
Georgia Allows:
Voluntary State Income Tax Withholding
State income tax will be withheld only if you instruct us to do so. If you want state income tax to be withheld, you must indicate the amount or percentage.
Hawaii:
Prohibits State Income Tax Withholding
State income tax will not be withheld from your distribution, even if you elect to withhold state income tax.
Idaho Allows :
Voluntary State Income Tax Withholding
State income tax will be withheld only if you instruct us to do so. If you want state income tax to be withheld, you must indicate the amount or percentage.
Illinois Allows :
Voluntary State Income Tax Withholding
State income tax will be withheld only if you instruct us to do so. If you want state income tax to be withheld, you must indicate the amount or percentage.
Indiana Allows :
Voluntary State Income Tax Withholding
State income tax will be withheld only if you instruct us to do so. If you want state income tax to be withheld, you must indicate the amount or percentage.
Iowa Has :
A Mandatory State Income Tax Withholding When Federal Income Tax is Withheld
You must elect to withhold state income tax when federal income tax is withheld from your distribution. If you do not make an election, it will be withheld at the minimum rate of 5.00%.
Kansas Has :
A Mandatory State Income Tax Withholding
State income tax will be withheld regardless of federal income tax election, unless you elect not to withhold. If you make no election, Kansas requires that withholding be taken at the minimum rate of 5%
Kentucky Allows :
Voluntary State Income Tax Withholding
State income tax will be withheld only if you instruct us to do so. If you want state income tax to be withheld, you must indicate the amount or percentage.
Louisiana Allows :
Voluntary State Income Tax Withholding
State income tax will be withheld only if you instruct us to do so. If you want state income tax to be withheld, you must indicate the amount or percentage.
Maine Has :
A Mandatory State Income Tax Withholding When Federal Income Tax is Withheld
You must elect to withhold state income tax when federal income tax is withheld from your distribution. If you do not make an election, Maine requires that withholding be taken at the minimum of 5.00%.
Maryland Allows :
Voluntary State Income Tax Withholding
State income tax will be withheld only if you instruct us to do so. If you want state income tax to be withheld, you must indicate the amount or percentage. You cannot elect less than $5 if you choose to withhold.
Massachusetts Has :
A Mandatory State Income Tax Withholding When Federal Income Tax is Withheld
You must elect to withhold state income tax when federal income tax is withheld from your distribution. If you do not make an election, it will be withheld at the maximum rate of 5.1%.
Michigan Has :
A Mandatory State Income Tax Withholding
Michigan requires state income tax for all distributions. If you make no election, Michigan requires that withholding be taken at the minimum rate of 4.25% on distributions from retirement accounts.*
*The state of Michigan requires 4.25% tax withheld on distributions from retirement accounts. Residents can choose to have a smaller percentage withheld, or opt out of withholding entirely, by submitting a new distribution form and a Michigan Form W-4P. The forms can be mailed to us at the address shown at the top of the distribution form, or faxed to us at 866-468-6268. Please note that reducing or eliminating this withholding may subject you to underpayment penalties. We suggest you consult with a tax-planning professional for more information.
Minnesota Allows :
A Voluntary State Income Tax Withholding with an Official Election
Minnesota requires state income tax for all distributions. If you make no election, Minnesota requires that withholding be taken at the minimum rate of 6.25% on distributions from retirement accounts.*
*The state of Minnesota requires 6.25% tax withheld on distributions from retirement accounts. Residents can choose to have a smaller percentage withheld, or opt out of withholding entirely, by submitting a new distribution form and a Minnesota Form W-4P. The forms can be mailed to us at the address shown at the top of the distribution form, or faxed to us at 866-468-6268. Please note that reducing or eliminating this withholding may subject you to underpayment penalties. We suggest you consult with a tax-planning professional for more information.
Mississippi Allows :
Voluntary State Income Tax Withholding
State income tax will be withheld only if you instruct us to do so. If you want state income tax to be withheld, you must indicate the amount or percentage.
Missouri Allows :
Voluntary State Income Tax Withholding
State income tax will be withheld only if you instruct us to do so. If you want state income tax to be withheld, you must indicate the amount or percentage.
Montana Allows :
Voluntary State Income Tax Withholding
State income tax will be withheld only if you instruct us to do so. If you want state income tax to be withheld, you must indicate the amount or percentage. You cannot elect less than $10 if you choose to withhold.
Nebraska:
State Income Tax Withholding
Premature distributions have voluntary withholding elections with no minimums. State income tax will be withheld only if you instruct us to do so. If you want state income tax to be withheld, you must indicate the amount or percentage.
All other distributions you must elect to withhold state income tax when federal income tax is withheld from your distribution. If you do not make an election, it will be withheld at the minimum rate of 5%.
Nevada:
Prohibits State Income Tax Withholding
State income tax will not be withheld from your distribution, even if you elect to withhold state income tax.
New Hampshire:
Prohibits State Income Tax Withholding
State income tax will not be withheld from your distribution, even if you elect to withhold state income tax.
New Jersey Allows :
Voluntary State Income Tax Withholding
State income tax will be withheld only if you instruct us to do so. If you want state income tax to be withheld, you must indicate the amount or percentage. You cannot elect less than $10 if you choose to withhold.
New Mexico Allows :
Voluntary State Income Tax Withholding
State income tax will be withheld only if you instruct us to do so. If you want state income tax to be withheld, you must indicate the amount or percentage.
New York Allows :
Voluntary State Income Tax Withholding
State income tax will be withheld only if you instruct us to do so. If you want state income tax to be withheld, you must indicate the amount or percentage. You cannot elect less than $5 if you choose to withhold.
North Carolina Has :
A Mandatory State Income Tax Withholding
North Carolina requires state income tax for all distributions. If you make no election, North Carolina requires that withholding be taken at the minimum rate of 4.00% on distributions from retirement accounts.†
**The state of North Carolina requires 4.00% tax withheld on distributions from retirement accounts. Residents can choose to have a smaller percentage withheld, or opt out of withholding entirely, by submitting a new distribution form and a North Carolina Form NC–4P. If your distribution is an eligible rollover distribution, you do not have the option of electing not to have State income tax withheld from the distribution. The forms can be mailed to us at the address shown at the top of the distribution form, or faxed to us at 866-468-6268. Please note that reducing or eliminating this withholding may subject you to underpayment penalties. We suggest you consult with a tax-planning professional for more information.
North Dakota Allows :
Voluntary State Income Tax Withholding
State income tax will be withheld only if you instruct us to do so. If you want state income tax to be withheld, you must indicate the amount or percentage.
Ohio Allows :
Voluntary State Income Tax Withholding
State income tax will be withheld only if you instruct us to do so. If you want state income tax to be withheld, you must indicate the amount or percentage.
Oklahoma Has :
A Mandatory State Income Tax Withholding When Federal Income Tax is Withheld
You must elect to withhold state income tax when federal income tax is withheld from your distribution. If you do not make an election, Oklahoma requires that withholding be taken at the minimum rate of 4.75%.
Oregon Has :
A Mandatory State Income Tax Withholding
State income tax will be withheld regardless of federal income tax election, unless you elect not to withhold. If you make no election, Oregon requires that withholding be taken at the minimum rate of 8.00%.
Pennsylvania Allows :
Voluntary State Income Tax Withholding
State income tax will be withheld only if you instruct us to do so. If you want state income tax to be withheld, you must indicate the amount or percentage.
Rhode Island Allows :
Voluntary State Income Tax Withholding
State income tax will be withheld only if you instruct us to do so. If you want state income tax to be withheld, you must indicate the amount or percentage.
South Carolina Allows :
Voluntary State Income Tax Withholding
State income tax will be withheld only if you instruct us to do so. If you want state income tax to be withheld, you must indicate the amount or percentage.
South Dakota:
Prohibits State Income Tax Withholding
State income tax will not be withheld from your distribution, even if you elect to withhold state income tax.
Tennessee:
Prohibits State Income Tax Withholding
State income tax will not be withheld from your distribution, even if you elect to withhold state income tax.
Texas:
Prohibits State Income Tax Withholding
State income tax will not be withheld from your distribution, even if you elect to withhold state income tax.
Utah Allows :
Voluntary State Income Tax Withholding
State income tax will be withheld only if you instruct us to do so. If you want state income tax to be withheld, you must indicate the amount or percentage.
Vermont Has :
A Mandatory State Income Tax Withholding
State income tax will be withheld regardless of federal income tax election, unless you elect not to withhold. If you make no election, Vermont requires that withholding be taken at the minimum rate of 30% of federal withholding election.
Virginia Allows :
Voluntary State Income Tax Withholding
State income tax will be withheld only if you instruct us to do so. If you want state income tax to be withheld, you must indicate the amount or percentage.
Washington:
Prohibits State Income Tax Withholding
State income tax will not be withheld from your distribution, even if you elect to withhold state income tax.
West Virginia Allows :
Voluntary State Income Tax Withholding
State income tax will be withheld only if you instruct us to do so. If you want state income tax to be withheld, you must indicate the amount or percentage.
Wisconsin Allows :
Voluntary State Income Tax Withholding
State income tax will be withheld only if you instruct us to do so. If you want state income tax to be withheld, you must indicate the amount or percentage. You cannot elect less than $5 if you choose to withhold.
Wyoming:
Prohibits State Income Tax Withholding
State income tax will not be withheld from your distribution, even if you elect to withhold state income tax.