When was the last time someone ever forced you to take money out of your savings account to use for yourself? That may sound crazy, but that’s exactly what the IRS does eventually with your 401k and other retirement accounts. Commonly known as a “reverse holdup”, a 401k RMD (which stands for “reverse minimum distribution”) is when the government requires you to start making withdraws from your 401k account, typically starting at age 70-1/2. The reason they want you do this is simple: They want to start collecting the taxes on the money you’ve been sheltering from them all these years. Remember that with a traditional 401k you avoided … [Read more...]
How to Use an IRA RMD Table to Calculate Your Retirement Payments
If you have a traditional Individual Retirement Account (IRA) that you have been contributing to so that you have a source of funds after you reach retirement age, then you need to know how to read an IRA RMD Table. This is important because not everyone receives the same required minimum distribution (RMD) from their IRA accounts. The amount you receive is going to be based on your account balance and the number of years you are expected to live once you reach the minimum distribution age. Before you jump over to the IRS site to access an IRA RMD Table, you should understand the rules that govern IRA RMDs. They are quite simple, but they … [Read more...]