A crucial aspect of managing your retirement funds is understanding the concept of Required Minimum Distributions (RMDs). These are mandatory withdrawals from qualified retirement plans, such as 401(k)s and IRAs, that must begin after you turn 70.5 years old. The calculation for RMDs is based on the value of your accounts and your life expectancy, as determined by the IRS. It's worth noting that RMDs do not apply to Roth IRAs or 401(k)s where you are still employed. Remember, failure to take an RMD can result in a hefty 50% penalty. Stay on top of your RMDs to ensure a smooth and successful retirement.
