Is Taking Your Required Minimum Distribution (RMD) in May a Good Idea?
Using retirement accounts is one of the best ways to save for your retirement. Not only are you proactively saving for retirement, but you're also getting a tax break for doing it.Accounts like 401(k)s and traditional IRAs have upfront tax breaks by allowing you to lower your taxable income the year you make contributions. Unfortunately, skipping out on taxes on the front end means you're responsible for paying taxes on withdrawals from these accounts in retirement.To avoid a situation in which someone doesn't make withdrawals to avoid paying taxes, the IRS puts in place required minimum distributions (RMDs). If you're currently required to take RMDs or will be soon, and wondering if taking your RMD in May is a good idea, the short answer is that it depends.Continue reading
Using retirement accounts is one of the best ways to save for your retirement. Not only are you proactively saving for retirement, but you're also getting a tax break for doing it.
Accounts like 401(k)s and traditional IRAs have upfront tax breaks by allowing you to lower your taxable income the year you make contributions. Unfortunately, skipping out on taxes on the front end means you're responsible for paying taxes on withdrawals from these accounts in retirement.
To avoid a situation in which someone doesn't make withdrawals to avoid paying taxes, the IRS puts in place required minimum distributions (RMDs). If you're currently required to take RMDs or will be soon, and wondering if taking your RMD in May is a good idea, the short answer is that it depends.
