Function

• Depending on the type of IRA you have, you may be required to take what the IRS calls required minimum distributions (RMDs) annually. RMDs are determined by dividing an IRA's worth on the previous Dec. 31 by your life expectancy; you can find life expectancy tables for this purpose in IRS Publication 590.
  
  

Time Frame

• You must begin taking RMDs the year you turn 70 1/2 if you own a traditional, SEP or SIMPLE IRA. If you inherit any type of IRA, you must begin taking RMDs the year following the original owner's death. IRA beneficiaries also have a second option: they may let the account sit for five years, then empty it completely.
  
  

Considerations

• If you are the sole inheritor of your spouse's IRA, you can avoid late withdrawal penalties by choosing to treat the IRA as your own. In this case, you would not need to take RMDs until you turned 70 1/2 if you had a traditional, SEP or SIMPLE IRA. If your spouse left you a Roth IRA, you would not need to take RMDs in your lifetime.
  
  

Significance

• IRAs were designed to provide a tax shelter for retirement savings, but not forever. Traditional, SEP and SIMPLE IRAs are tax deferred, and therefore IRS rules require owners to begin emptying them, and paying income taxes on withdrawals, if they live long enough. IRA beneficiaries are not entitled to let inherited wealth accumulate, tax free, indefinitely.