Cashing in

Make required minimum distributions work for you

Key takeaways

  • Beginning at age 70½, you are required to take distributions from your IRAs and other retirement accounts every year
  • Required minimum distributions (RMDs) increase with age, and are taxed as ordinary income
  • With a better understanding of how RMDs work and what your options are, you’ll be equipped to make these withdrawals work with your plan, not against it

A common misconception about RMDs is that they must be taken in cash. But if you don’t want to liquidate invested assets, you can transfer in-kind securities from an IRA to a taxable account. Your RMDs will always be taxable unless you take yours as a qualified charitable distribution, though there are limitations. In some circumstances, you may want to take more than the RMD and convert it to a Roth IRA. Find out how required minimum distributions will affect your tax bracket, and more, in the new Modern Retirement Monthly (PDF, 209 KB).

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