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Understanding Required Minimum Distributions (RMDs) in Retirement
Author: Kathy Suits
As you enjoy retirement, it's important to stay on top of key financial responsibilities—including your Required Minimum Distributions (RMDs). If you have a traditional IRA, 401(k), or similar retirement account, the IRS requires you to begin withdrawing a minimum amount annually once you reach a certain age.
When Do RMDs Begin?
As of 2025, RMDs generally begin at age 73. If you turned 73 this year or earlier and haven't started taking withdrawals, now is the time to speak with a tax professional to avoid potential penalties.
Why Are RMDs Important?
The government taxes traditional retirement accounts when money is withdrawn. RMDs ensure that retirees eventually pay income tax on funds that may have grown tax-deferred for decades. Failing to take your RMD can result in a penalty of up to 25% of the amount that should have been withdrawn.
How Much Do You Have to Withdraw?
The amount is based on your account balance and life expectancy, using IRS tables. Your financial advisor or tax preparer can help you calculate this correctly each year.
Tax Planning Tip
If you don't need your RMD for daily expenses, consider strategies like Qualified Charitable Distributions (QCDs), which allow you to donate up to $100,000 per year directly from your IRA to a qualified charity—reducing your taxable income in the process.
Summit Tax Service specializes in helping retirees navigate tax issues with confidence. Whether you're managing RMDs or just want peace of mind during tax season, we're here to help.
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