The Required Minimum Distribution (RMD) is a mandatory, annual withdrawal that individuals must take from their retirement savings accounts, such as a traditional IRA, 401(k), or other tax-deferred retirement plans, starting at a certain age.
The Required Minimum Distribution (RMD) is a mandatory, annual withdrawal that individuals must take from their retirement savings accounts, such as a traditional IRA, 401(k), or other tax-deferred retirement plans, starting at a certain age.
The RMD is calculated based on the account balance as of December 31 of the previous year and the account holder's life expectancy, as determined by IRS tables.
The purpose of the RMD is to ensure that individuals do not simply accumulate retirement funds to pass on to heirs, but actually use them for retirement. By requiring these withdrawals, the IRS ensures that it can collect the taxes that have been deferred on the contributions and the investment gains.
The Required Minimum Distribution (RMD) is a mandatory, annual withdrawal that individuals must take from their retirement savings accounts, such as a traditional IRA, 401(k), or other tax-deferred retirement plans, starting at a certain age.
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