Tax free strategies at
RMD’s are forced distributions by the IRS on your retirement accounts. This can cause you to pay a lot more in taxes in retirement than you may have planned for. Even if you are investing in the right way – you don’t want to pay more in taxes in retirement than you should.
So here is some quick financial education. A good strategy can help you save on taxes in retirement.
When you reach age 70½, you’re required to withdraw a certain amount of money from your retirement accounts each year. That amount is called a required minimum distribution, or RMD.
RMD rules apply to tax-deferred retirement accounts:
Traditional IRAs
Rollover IRAs
SIMPLE IRAs
SEP IRAs
Most small-business accounts
Most 401(k) and 403(b) plans
Learn about the tax bucket strategy here:
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This does not sound right. Missing some information, specifically what you used for the RMD at age 70, as well as any assumptions made about other taxable income. At a 22% tax rate you are not paying 250K in taxes on a 500K balance. Assuming a 26 year distribution period the RMD would be slightly less than 20K and the tax paid, assuming the 22% bracket (also probably a stretch in this case), would be about $4,400 annually or $110K over the distribution period.