[rlockr112]

What amount of a 401k do I have to withdraw at the age of 70.5

[ScottGem]

First its not a good idea to piggyback your question on someone else's. This can lead to confusion. You should start a new thread. So I've moved your question to its own thread.

There is a speciifc formula based on age, presumed longevity and the balance in the account. Your plan administrator should help calculate this for.

[ebaines]

The mandatory withdrawal amount is based on an assumption of your life expectancy. The minimum withdrawal that you must start from your 401(k) and an IRA plans at age 70-1/2 is about 10.4%. Here is a chart that gives you the required distribution by age:

IRA minimum distributions table

[UK1997]

I've heard that 4% (of the total account balance) per year is a good rule thumb.

[ebaines]

I've heard that 4% (of the total account balance) per year is a good rule thumb.

That's a fine conservative rule of thumb to make sure that your investmet nest egg will last for many, many years - vitrtually forever - and grow to keep pace with inflation. It's not a bad withdrawal strategy if you are relatively young - say 60 or so. However, it does not satisy the requirements of the IRS with respect to minimum distributons from an IRA when you reach age 70-1/2. The 10-1/2% minimum withdrawal that the IRS reqiures is determined by the number of years of your life expectancy. For someone who is 70 years old, they have a life expectancy of 20 years or so, and a withdrawl of this magnitude should allow the assets to last just about last that long. That way the IRS gets its income tax paymet from you while you are still alive, as opposed to passing it all on to your heirs.

[MukatA]

The minimum required distribution (RMD) is amount in the plan divided by number of years of the life expectancy.
Read Your U.S. Tax Return: Elective Deferrals 401(k) Plans