Millions of Americans know the advantages of putting money into tax-deferred retirement savings, such as 401(k) plans and individual retirement accounts. And many know that the government will get its share eventually. Withdrawals are generally taxable—and a minimum payout is required each year once you hit age 70½.

"It's how the government gets tax revenue from accounts that are tax-deferred," says Jean Setzfand, AARP's vice president of financial security.

But details of the rules on required minimum distributions, or RMDs? That's another story. The rules can be complicated, depending on the type of plan or account.

The Internal Revenue Service is gearing up to increase scrutiny of IRA errors, including inadequate withdrawals. And the cost of getting it wrong is high: a 50% tax on the difference between what you should have withdrawn and what you actually did, if anything.

If you're getting close to age 70½, or just thinking about retirement, here are some things you need to know.

How will I know how much I have to withdraw?

Banks, brokerage firms and mutual-fund companies typically notify account owners in January of the amount they must withdraw that year, based on Internal Revenue Service tables. The minimum payout is generally calculated by dividing what is in an account at the end of the previous year by a "distribution period" based on the account owner's projected life span. For example, someone who is 75 years old with $200,000 in a 401(k) account at the end of 2012 would be required to withdraw at least $8,734 this year ($200,000 divided by 22.9), but a 93-year-old with an account balance of $200,000 would have to take a payout of $20,833 ($200,000 divided by 9.6).

Jesse Lefkowitz

The amount may be calculated differently in certain situations, such as when your spouse is more than 10 years younger than you are, which can reduce the required withdrawal. The tables are in IRS Publication 590.

Note that if you are still working and participating in a 401(k) on the job, you generally aren't required to take withdrawals from that one. Another complexity: While Roth IRAs, which are funded with after-tax money, aren't subject to RMD rules, Roth 401(k) accounts are (although those withdrawals generally aren't taxable).

What happens if I have multiple accounts?

If you have several IRAs—or IRA-based accounts, such as a SEP, or simplified employee pension—the minimum distribution should be calculated from each one, but you can take the total payout from just one account or several as long as it meets the minimum required. And 403(b) plans usually are treated like IRAs for the purpose of required distributions.

But if you have more than one 401(k)—if you left money in previous employers' plans, for example—you must take a separate minimum distribution from each. If an account is invested in several mutual funds, you can choose which fund to withdraw from.

One way to avoid having to deal with multiple old 401(k) accounts is to roll them over into an IRA or into your current 401(k) if you are still employed and the plan permits such rollovers.

When can I get the money?

As long as the total adds up to at least the required minimum for the year, you can take the payouts as frequently or infrequently as you like, beginning the year you turn 70½ and each year thereafter.

There's an extra wrinkle for that first year: If you want, rather than take your first RMD the year you reach 70½, you can postpone it until April 1 of the following year. If you reach 70½ this year, for instance, you could delay your 2013 withdrawal to early 2014. But you would also have to take your 2014 distribution in 2014, making two distributions in one year and increasing your taxable income, which could push you into a higher tax bracket. You might want to consult a tax adviser if you are considering delaying the first payout.

"It gets very confusing," says Donna Norwood, senior vice president in Fidelity Investments' defined-contribution product management group. Fidelity, like many other companies, sends information to account owners in the year before they have to start taking distributions and provides assistance on its website and by phone.

Mutual-fund companies and other fiduciaries often permit account holders to set up automatic payouts—monthly, quarterly or annually—and you usually can arrange to have taxes withheld.

Distributions are reported as income on your annual tax return. While nothing on the return requires proof that you met the required minimum, you should keep records to support what you have reported in case of an audit. There are work sheets in the back of Publication 590 that may be helpful.

What if I don't need the cash to live on?

If you are still working and covered by a 401(k) on the job, you can avoid RMDs on older 401(k)s by rolling the balances into your current plan, if it allows rollovers. But you cannot roll RMDs into another tax-deferred account. You also can't roll RMDs into a Roth IRA, although if you have earned income that falls within the limits set by the IRS, you can still make an after-tax contribution to a Roth IRA. Converting a 401(k) or traditional IRA to a Roth IRA would eliminate the requirement of future annual distributions—but at the cost of a big tax bill for the year you make the switch.

If you err and don't take out enough cash, you can try to get the penalty waived on the grounds that you made what the IRS calls a "reasonable error" and you are taking "reasonable steps" to remedy the situation. If this applies to you, you should file Form 5329 with a letter of explanation.

For this year's required withdrawals from an IRA, you can transfer all or part, up to $100,000, to charity and avoid income tax on the amount you contribute. But this provision doesn't apply to 401(k)s, 403(b)s, SEPs or other retirement plans, just IRAs. It was part of the tax compromise legislation passed by Congress on Jan. 1, reinstating for 2012 and 2013 a provision that expired at the end of 2011.

Keep careful records, just as you do with other charitable contributions, because you have to report a qualified charitable distribution on your annual income tax return.

Ms. Jasen is a writer in New York. Email her at