Investment Company and Variable Contracts Products Representative (Series 6)Practice Exam

At what age must IRA withdrawals begin to avoid a late withdrawal penalty?

1. 65

2. 70 1/2

3. 72

4. 75

The correct answer is: 70 1/2

The correct age at which IRA (Individual Retirement Account) withdrawals must begin to avoid a late withdrawal penalty was historically set at 70 1/2. This requirement was established under the IRS regulations, which mandated that individuals must start taking required minimum distributions (RMDs) from their traditional IRAs once they reach this age. However, it's noteworthy that the Setting Every Community Up for Retirement Enhancement (SECURE) Act, enacted at the end of 2019, changed the required age for RMDs. Under this legislation, the age for starting RMDs was increased from 70 1/2 to 72 for individuals who turn 70 1/2 after December 31, 2019. Consequently, while the legislation allows for individuals born on or after July 1, 1949, to start withdrawals at age 72, it is still relevant to know the old rule regarding 70 1/2, given that many discussions on this topic might reference it for individuals who were subject to the prior regulation. Since the question specifically asks about the historical age requirement without consideration of those born after the SECURE Act's implementation, 70 1/2 is a crucial age in understanding the original guidelines for R