Why These Rules Matter
There are several reasons why these rules are important:
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Avoiding large penalties. The financial cost of ignoring RMDs can be steep.
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Impact on your taxes. RMDs count as part of your taxable income. Taking large distributions could push you into a higher tax bracket, potentially increasing taxes on your Social Security or Medicare premiums.
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Cash flow planning. Knowing when and how much you will need to take out helps with budgeting: living expenses, medical costs, travel, gifts, charitable giving, etc.
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Estate/inheritance considerations. Properly managing RMDs (and the rules for beneficiaries) can help preserve more of your retirement savings for your heirs. Also, not all accounts are treated the same after death.
