If you have tax-deferred retirement accounts, you'll need to take required minimum distributions (RMDs) eventually. If not properly planned for, these distributions could take a tax toll on your retirement nest egg. Applying some smart RMD strategies could help reduce distributions and potentially lower your tax bill.
The amount you're required to withdraw is based on your account balance and life expectancy (according to IRS tables). Withdrawals are taxed at your ordinary income tax rate. Failing to take RMDs on schedule can result in a 50% tax penalty.
If you have large balances in your IRAs or workplace retirement accounts, taking RMDs could inflate your tax bill. That's where it can be helpful to have a few RMD strategies in your back pocket to try and reduce what you owe.
Ready to learn six common ways to potentially shrink your RMDs in order to minimize taxes? Learn more here.
Consulting a fiduciary financial advisor could help you determine a plan that factors RMDs and taxes into your overall retirement goals. SmartAsset developed a no-cost tool to match you with up to three vetted fiduciary advisors serving your area, each legally bound to act in your best interest. It only takes a few minutes, and in many cases you can be connected instantly with an advisor to consult. It's never too late to work towards a comfortable retirement.
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