I understood that after the age of 69 or 70 one could withdraw their 401K or IRA money and not pay any Federal Income tax on this withdrawal even if the money that was placed into these accounts was pretaxed income.

Karl Jacobson

ebaines

Sorry, not true. You must pay taxes regardless of your age. You may be thinking about the required minimum withdrawals you must start in the year you turn age 70-1/2. These withdrawals are of course taxable, with the exception of withdrawals from a Roth IRA or Roth 401(k), which are tax free. Quoting from: Understanding the IRA Withdrawal Rules (Tax Guide: Personal Finance) | SmartMoney.com:

"Tapping your IRA, of course, means you'll also get stuck with the resulting income-tax bills. In fact, the whole reason your friends in Congress enacted the minimum withdrawal rules was to force you to hand over the government's share of your IRA sooner rather than later. If you fail to take at least the minimum withdrawal amount each year, you'll owe a 50% penalty on the shortfall. Of course, you can always take out more than the minimum and pay the extra income taxes. In fact, the IRS will be delighted if you do. "