It is currently happening to some and eventually, this will likely happen to all of us. I am referring to Required Minimum Distributions (RMD). The RMD is your required minimum distribution amount which the Internal Revenue Services requires you to withdraw each year from your IRA, SEP-IRA, Simple IRA or retirement plan account when you reach age 70 ½.
Even though there is a calculation -see below- that will help you to determine how much you must withdraw from your retirement account, your withdrawal can be more than the mandatory minimum amount. Once withdrawn, the RMD will be included in your taxable income, which depending on the amount of income that you are receiving in retirement, could kick you into a higher tax bracket. Ouch! This feel even more painful if you consider that many people who are required to take annual RMD would rather just leave the funds in their retirement account because they don’t need the extra income.
Read the full post here: https://www.answersaboutwealth.com/convert-rmds-into-tax-free-income/
