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Investing Specialists

8 Questions for RMD Season

We're coming into the year's home stretch; do you know where your required minimum distributions are?


It's a high-class problem for a retiree: A large tax-deferred portfolio and no immediate need for spending money. But even though you would rather leave the money in its place, allowing it to compound on a tax-deferred basis for your heirs, the government won't let you take advantage of retirement-savings tax breaks forever. At some point, you are required to start pulling the money out and paying the tax collector.

Enter required minimum distributions, or RMDs--mandatory withdrawals that must commence from tax-deferred accounts such as 401(k)s and Traditional IRAs once a retiree passes age 70-1/2. (Investors in other situations, such as those who inherit IRAs, are also required to take RMDs, but for the purpose of this article, I'll focus on RMDs from one's own retirement accounts.)

Christine Benz does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.