"RMDs, as they are commonly known, are the minimum amount individuals who are age 70½ and older must take out of their retirement funds such as individual retirement accounts or workplace-based accounts such as 401(k) plans." Lorie Konish explains that RMDs are based on IRS longevity tables.
*"If you’re 70½ or older, or inherited a retirement account, you need to take your required minimum distribution by Dec. 31."
*"Now is the time to get organized and start thinking about that distribution. If you miss the Dec. 31 deadline, you will face a tax penalty."
*"Here are the steps to take and moves to consider so you don’t leave money on the table."
“Always take an inventory first, so you know where all your retirement accounts are."
Consult the IRS RMD tables to determine the amount but have a financial professional or the institution holding your account double-check your RMD calculation.
If you have multiple IRAs or 403(b) accounts, you can take your total RMD from any one or a combination of those accounts.
However, if you have more than one 401(k) account, you have to take money from each one.
Be sure to have a plan for paying your income taxes. The full article offers suggestions.
One way to avoid paying taxes on your RMD: Give the money to charity.
"A qualified charitable distribution allows you to make donations to a charity directly from your IRA."
"So if your RMD is $5,000 and you typically give $5,000 to charity each year, you can donate that money and not pay tax on it."