5 Strategic Ways for Retirees to Use Their Required Minimum Distribution (RMD)

You're probably aware of required minimum distributions (RMDs) if you're retired or nearing retirement. But did you know that RMDs were first mandated in 1974, the same year individual retirement accounts (IRAs) were introduced as a savings vehicle for Americans without pensions? Given that Americans would spend decades making tax-deferred contributions to their retirement accounts, the government knew it would eventually need a way to collect taxes on the money -- and that's where RMDs come in. Owners of tax-deferred retirement accounts must begin making withdrawals at age 73 or 75 (depending on the year they were born) and pay taxes the same year withdrawals are made. RMDs are mandatory until you deplete your retirement account, and failure to take an RMD can result in a 25% penalty.Continue reading

Apr 11, 2025 - 11:31

5 Strategic Ways for Retirees to Use Their Required Minimum Distribution (RMD)

You're probably aware of required minimum distributions (RMDs) if you're retired or nearing retirement. But did you know that RMDs were first mandated in 1974, the same year individual retirement accounts (IRAs) were introduced as a savings vehicle for Americans without pensions?

Given that Americans would spend decades making tax-deferred contributions to their retirement accounts, the government knew it would eventually need a way to collect taxes on the money -- and that's where RMDs come in.

Owners of tax-deferred retirement accounts must begin making withdrawals at age 73 or 75 (depending on the year they were born) and pay taxes the same year withdrawals are made. RMDs are mandatory until you deplete your retirement account, and failure to take an RMD can result in a 25% penalty.