The good news is that you do not have to start withdrawing until you are 70 1/2 years old. The bad news is that you must withdraw a certain percentage of your IRA each year once you reach that age.

These withdrawals come with income tax bills, and that is one of the main reasons that the government put the minimum withdrawal limits into place. If you do not meet the minimum withdrawal then you will owe a penalty of 50% on top of all the income taxes you owe.

The minimum amount you must pay depends on the balance of your IRA account. It will be a percentage based on how much you have and your age. The younger you are the higher your life expectancy is and thus the lower the withdrawal minimum is. The withdrawal minimum will grow with each year that you do.