Approaching 73? It’s time for your RMDs (Required Minimum Distributions), not just with traditional IRAs but also with employer-sponsored and IRA-based retirement plans. These are the amounts the IRS requires you to withdraw, taxed as ordinary income. But don’t worry, we’ll contact you at the start of the year to smoothly guide you through the process! 📈💰…(read more)

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Turning 73 is a major milestone in our lives, and for many people, it also marks the beginning of required minimum distributions (RMDs) from retirement accounts such as individual retirement accounts (IRAs) and 401(k)s. While this may seem daunting or overwhelming, there are steps that can be taken to tackle RMDs and ensure a smooth transition into this new phase of retirement planning.

One of the first things to do upon turning 73 is to understand the rules and regulations surrounding RMDs. The IRS requires individuals to start taking annual distributions from their retirement accounts once they reach age 72 (or 70 ½ if they reached that age before January 1, 2020). The amount of the RMD is calculated based on the account balance and life expectancy, and failure to take the RMD can result in significant penalties.

To simplify the process of taking RMDs, many financial institutions offer automatic withdrawals or calculations for account holders. It is important to communicate with the financial institution to ensure that the correct amount is being distributed and to avoid any potential mistakes.

In addition to understanding RMD rules, it is also important to consider what to do with the funds once they are withdrawn. For some individuals, they may use the RMDs as income to cover living expenses in retirement. For others, they may choose to reinvest the funds or use them for charitable donations. Regardless of how the funds are used, it is important to have a plan in place.

Another important consideration when it comes to RMDs is taxes. RMDs are considered taxable income, so it is important to plan accordingly and set aside funds to cover any tax liabilities that may arise. Working with a financial advisor or tax professional can help ensure that individuals are prepared for any tax obligations.

Overall, turning 73 can be a significant moment in our retirement planning journey, but by understanding RMD rules, having a plan in place for the funds, and considering tax implications, individuals can tackle RMDs with confidence and ease. With the right support and guidance, navigating the world of RMDs can be a manageable and even empowering experience.