Retirement Requires Strategy—Just Like Everything Else

Each of us navigates life with strategy. We build careers with intention, make choices about our health, plan for our families, and approach business with clear direction. Retirement shouldn’t be any different. One of the most overlooked aspects of retirement planning is understanding how and when taxes will impact your savings—because as the saying goes, “What the IRS giveth, the IRS taketh away.”

When you reach age 70½, the IRS requires you to start withdrawing from your tax-deferred retirement accounts. These Required Minimum Distributions (RMDs) may sound straightforward, but they come with complex rules—and significant tax implications. The first wave of baby boomers is already facing this reality, and millions more will follow.

If you’ve spent decades saving diligently, don’t let poor timing or a lack of planning eat into your nest egg. Understanding your obligations—and options—can make all the difference.

The Basics of Required Minimum Distributions (RMDs)

Planning ahead for RMDs starts well before age 70½. Here are a few essential facts to keep in mind:

• When RMDs Begin: You must begin withdrawing from IRAs, 401(k)s, and other tax-deferred accounts by April 1 of the year after you turn 70½. After that, withdrawals must be made by December 31 each year.

• Still Working? If you’re still employed and participating in your current employer’s retirement plan, you may be able to defer RMDs for that account—but not for others.

• How Amounts Are Calculated: The IRS uses a formula based on your life expectancy to determine your annual withdrawal amount.

• Penalties for Missing RMDs: Failure to take your RMD on time comes with a steep penalty—50% of the amount that should have been withdrawn.

To make the process easier and avoid costly mistakes, consider having your IRA custodian calculate and automatically distribute the funds for you. Most providers offer this service, and it can offer peace of mind as you manage your retirement income.

Work With a Fiduciary—Your Future Self Will Thank You

Retirement planning isn’t just about following rules—it’s about making smart decisions that align with your goals. While no one can predict future tax policy or market changes, one piece of timeless advice holds true: work with a fiduciary.

A fiduciary adviser is legally required to act in your best interest. This distinction matters. When you’re navigating RMDs, taxes, and the transition from saving to spending, you want to be sure that your financial guide is focused on what’s right for you—not just what’s profitable for them.

If RMDs or retirement income planning seem overwhelming, you’re not alone. We’re here to help. Our website has a dedicated section on this very topic, and we’re happy to answer questions or offer guidance tailored to your situation.

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