As we get older and start to think about reducing our working hours or retiring all together, it’s time to make a plan for your finances before you take the leap. If you have been contributing to an Individual Retirement Account (IRA), 401K or other pre-tax account, you’ll need to start taking money out of your accounts. 
You might be thinking, I don’t want to take the money out until I need it. Well, the government sees it differently. They want there tax money since you have deferred the taxes. Remember, this becomes taxable money and may put you in a higher tax bracket. As always you’ll need to discuss this with your tax preparer, bank / investment professional and/or attorney for what is right for you and your situation.
The old rule, is in the year after you turn 70 1/2 you were required to take a minimum distribution from your account by April 1 of the following year for the first year (then Dec 31 for year 2 subsequent years). This rules is still true for people who turned 70 1/2 years old by the end of 2019. Keep in mind that you can take as much as you want, but you have to take a minimum distribution each and every year after.
The new rule is part of the SECURE (Setting Every Community Up for Retirement Enhancement) Act, passed in 2019. Now, if you are younger than 70 1/2 by Dec 31, 2019, you can now wait until you are 72 years old before having to take the minimum distribution from your tax deferred account(s). So you can let your money grow an additional two years.
Now, to avoid penalties with your required minimum distribution, you must take out a minimum each and every year. To determine your amount, start with the value of your account on Dec 31 of the prior year and divide that by your life expectancy to come up with your amount. If you take less than your are required, the penalties are ridiculously high. They can be as much as 50%. You have worked very hard for your money and you wouldn’t want to give it up to penalties.
Make a plan that’s right for you with your professionals, so that you get the money you need within the guidelines for the distribution. Make sure to take at least what your are entitled. You’ll have to pay the taxes on the distribution, but you don’t want to pay additional penalties to the government. With this planning step, you can decide if you can afford to fully retire or if you need to keep working.
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