When the time comes to start tapping your IRA, these new rules could save you a bundle. Here's how to make the most of them.

Attention traditional (non-Roth) IRA owners: If you're going to turn age 70 1/2 this year, the IRS requires that you begin taking minimum withdrawals. Here's what you need to know to do it right.

Minimum Withdrawal Basics
If you're near that magic age of 70 1/2, then you probably already know that the tax laws require you to take mandatory payouts each year. If you turned 70 1/2 last year, you must take your first minimum withdrawal no later than April 1 of this year. (That is, unless you're among the few who opted to take their first mandatory payout last year.)

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.

Keep in mind, the IRA minimum withdrawal rules also apply to simplified employee pension, or SEP, accounts as well as Simple IRAs, since they're both considered IRAs for this purpose. But Roth IRA owners are exempt from the minimum withdrawal rules as long as the original account owner is alive.

When to Start Withdrawals
Since nothing the IRS does is ever simple, knowing when you need to start taking mandatory withdrawals, is -- but of course -- tricky. As you approach 70 1/2, you're faced with a choice. You can take your first minimum withdrawal during the year you turn 70 1/2, or you can take it by April 1 of the year after you turn 70 1/2. Then for each subsequent year, you must take at least the required minimum withdrawal by Dec. 31 of that year.

Why does it matter when you start tapping your IRA? Well, it can have significant tax implications. After all, if you don't take your initial minimum withdrawal during the year you turn 70 1/2, you must take two -- and pay the resulting double dip of taxes -- in the following year.

Calculating Minimum Withdrawals
The amount of each minimum withdrawal depends on your IRA account balance at the end of the previous year divided by a joint life-expectancy figure for you and your account beneficiary (even if you don't have one!) found in tables published by the IRS. The younger you are, the longer the life-expectancy figure. The longer the life-expectancy figure, the bigger the divisor. And the bigger the divisor, the lower the minimum withdrawal amount. Of course, lower minimum withdrawals mean lower taxes -- which, obviously, is good.

The minimum withdrawal rules automatically assume you've designated a person 10 years your junior as your IRA beneficiary. Don't worry, it doesn't matter to the IRS if your actual designated beneficiary is older than the assumed age. In fact, it generally doesn't matter if you've actually designated a beneficiary or not. This might strike you as odd, but there is some history behind it. (We'll spare you the titillating details.)

The only exception to the "automatically-10-years-younger-beneficiary rule" is when your spouse is designated as the sole IRA beneficiary and he or she is more than 10 years younger. In this somewhat unusual circumstance, you're allowed to calculate your IRA minimum withdrawals using more favorable joint life-expectancy figures based on the actual ages of you and your spouse.

Now, how these rules will affect you specifically depends on your age and how much money you have in your IRA. Click on the scenario below that applies to you:

1. You'll turn 70 1/2 this year
2. You turned 70 1/2 last year
3. You're over age 71 1/2, with no designated beneficiary
4. You're over age 71 1/2, with a designated beneficiary