You can accept distributions from your IRA (including your SEP-IRA, SIMPLE-IRA, or Gold Roth IRA account) at any time. There is no need to show difficulties in accepting a distribution. Withdrawals from traditional IRA accounts are subject to income taxes at the usual tax rate, and early withdrawals may be subject to a 10% penalty. There are exceptions to the rules that allow early withdrawals without imposing fines or taxes. For example, naming a beneficiary to a trust instead of a spouse eliminates the surviving spouse's ability to transfer the IRA in their name to take advantage of the IRA's ownership rules.
IRA withdrawal rules depend on the type of IRA, your age, and how long it's been since you first contributed to an IRA. While it may be difficult to predict, a Roth IRA may be a good option if you think you'll be in a higher tax bracket when you retire. Or, if you qualify, you can opt for a Roth IRA and contribute after-tax money in exchange for future tax-free distributions. Fortunately, the original owners of Roth IRAs are exempt from the RMD rules, but beneficiaries who inherit a Roth IRA are generally required to accept distributions, and those rules depend on several factors.
If you earn too much to contribute directly to a Roth, you may be able to make contributions indirectly through a strategy known as a clandestine Roth IRA. In general, Roth IRAs offer more flexibility because you can withdraw your contributions at any time, eligible withdrawals are tax-exempt and are not subject to RMD for the life of the account owner. The IRS requires that you calculate the RMD for each IRA separately, based on the value of the account at the end of the previous year divided by the life expectancy factor (taken from the corresponding table in IRS publication 590-B). To withdraw your earnings, you must wait until you are 59 and a half years old or older and at least five years have passed since you first contributed to a Roth IRA to avoid taxes and penalties.
Roth IRA account conversions require a 5-year retention period before earnings can be withdrawn tax-free, and subsequent conversions will require their own 5-year retention period. You can withdraw your earnings without penalties or taxes as long as you are 59 and a half years old or older and have had a Roth IRA for at least five years. You must calculate the RMD separately for each IRA you own, but you can withdraw the full amount from one or more IRAs. Because you make contributions to the Roth IRA with after-tax money, you can withdraw them tax-free at any time without taxes or penalties.
Moving from a traditional IRA to a Roth IRA might make sense if you think you'll be in a higher tax bracket when you start withdrawing funds, can pay conversion tax from outside sources, and have a reasonably long time horizon for assets to grow. For example, a spouse who inherits an IRA and has many years before reaching RMD age may consider transferring those assets to their own IRA. For example, if your will states that your IRA will be for your daughter, but your sister is listed in your IRA account as a beneficiary, your daughter may not receive the funds.
