Unlocking the Mystery of Required Minimum Distributions (RMDs): Your Guide to Retirement Withdrawals | by George Schneider, M.A. | Nov, 2024

What you need to know about taking money out of your IRA without losing your mind

Retirement accounts are like that mysterious box in your attic that you keep hearing about but never quite know how to open. One important aspect of these accounts is Required Minimum Distributions, or RMDs, which kick in when you reach a certain age. Don’t worry; we’re here to break it all down in a simple-to-digest, bite-by-bite way so you’ll feel like a pro by the time you’re done eating (whoops, reading!)

What Are RMDs and Why Do They Matter?

So, let’s start with the basics: What exactly is an RMD? It’s the minimum amount you’re required to withdraw from your retirement accounts (like IRAs and 401(k)s) once you hit age 73 (or 72, depending on when you were born). The government wants to make sure they eventually get their tax money from these accounts, and RMDs are their way of ensuring that happens. Remember all those years you got a tax deduction for contributing to your IRAs and didn’t pay a dime of taxes on all your income and capital gains in those accounts? Well, now it’s time to pay the piper, otherwise known as Uncle Sam.