You can withdraw or use your traditional IRA assets at any time. However a 10% early withdrawal penalty applies, with a few exceptions, if you withdraw or use IRA assets before age 59½.
If you are the owner of a Traditional NYCE IRA, you must start receiving distributions from your NYCE IRA account by April 1st of the year following the year in which you reach 72* (Required Minimum Distributions).
*The age for the Required Beginning Date for mandatory distributions increased from 70½ to 72 for distributions required to be made after December 31, 2019 and with respect to individuals who attain age 70½ after such date.
Required Minimum Distributions are based upon a distribution period generally determined using the Uniform Lifetime Table. However, if the sole beneficiary of the Traditional NYCE IRA is your spouse who is more than ten years younger than you, use the Ordinary Joint Life and Last Survivor Annuities - Two Lives Table.
If in any year you receive more than the Required Minimum Distribution for a particular year, you will not receive credit for the additional amount when determining the Required Minimum Distribution for future years.
To take a distribution from your account, you must submit a Traditional NYCE IRA Withdrawal Form.
You can take a full or partial distribution from your account, or you can schedule periodic payments. Periodic payments are distributions made over regular intervals and can be made monthly, quarterly, semi-annually, or annually.
* Distributions as a result of death, disability or divorce, please contact the NYCE IRA Administrative Office at (212) 306-7760, or 888-IRA-NYCE, if outside NYC, for instructions.
Any earnings grow tax-deferred until you take a distribution, and then you pay federal income tax and applicable state and local tax on the taxable amount of your distribution.
Taxability: Distributions from your Traditional NYCE IRA may be fully or partly taxable, depending on whether your IRA includes any non-deductible contributions.
For more information on figuring the non-taxable and taxable amounts, see IRS Publication 590 or a licensed tax professional.
Withholding: You determine the amount of federal income tax withheld or choose not to have any withheld by submitting a withholding certificate (W-4P).
If no form is submitted, tax will be withheld on periodic distributions as if you were married claiming three withholding allowances. Tax will be withheld on a 10% rate for non-periodic distributions.
New York State and New York City Tax Exemption:
Withdrawals from the NYCE IRA are eligible for a $20,000 annual New York State and New York City income tax exemption. This $20,000 exemption is applied against the cumulative distributions from a private employer retirement plan, a 401(k) plan, 457 plan or 403(b) plan, or other traditional IRAs. The exemption applies only to distributions taken as periodic payments to New York residents who are at least age 59½ and is in addition to the state income tax exemption for benefit payments received from the state or local employees’ public retirement systems.