Glossary
What is a required minimum distribution (RMD)?
A required minimum distribution is the amount you must withdraw each year from most tax-deferred retirement accounts once you reach the age set by law. The amount is calculated from your balance and life expectancy, and failing to take it triggers a penalty.
RMDs exist because those accounts were funded with untaxed money. The rules eventually force the tax to be paid.
They matter for planning because they are not optional and they can push you into a higher bracket, raise the taxable share of your Social Security, and increase Medicare premiums — all at once, and all without you spending a dollar more.
The years before RMDs begin are often one of the best planning windows you will get: income is low, brackets are open, and Roth conversions or accelerated withdrawals can reduce what is forced out later. Confirm the current starting age, which has changed more than once in recent years.
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