Did you know that with most retirement accounts, the IRS makes you start taking money out at some

point, even if you don't need it? Well, it's called the required minimum distribution or

RMD. And I'm about to explain how it works in this, the ninth episode of the retirement

planning education podcast. Welcome to the retirement planning education podcast, where you can learn all about IRAs and Roth IRAs, employer retirement plans, taxes, social security, Medicare, portfolio withdrawal strategies, annuities, estate planning, and much more.

And now here's your host, Andy Panko.

Welcome, everyone. We've got another great one today.

Today I will be talking about RMDs or required minimum distributions, how they work, what they are, when you have to take them, how to calculate them, and so forth.

Now, first, let me start by saying this doesn't apply to regular brokerage accounts, you know, normal after-tax brokerage accounts.

It's just in reference to what's called quote-unquote qualified accounts, things that are tax-deferred,

like a traditional IRA or 401K or 403B, even in some cases Roth accounts, like a Roth 401K.

So what they are is basically when you have one of these

tax preference accounts, tax qualified accounts, there's a benefit to it. Like it's a traditional

tax deferred account. You get a break up front. You get a tax break up front when you put the

money in. Now, think about this account this way. You think of it as an

asset, but it's really just untaxed income. When you view it from that perspective, it starts to make

sense. You haven't yet paid tax on it. You let the money sit in the account. It grows for potentially

decades. At some point, the IRS forces you to start recognizing the income, more specifically recognizing the

taxability of that income, as opposed to deferring this tax forever. So that's what it is.

And RMD stands for required minimum distribution. It's the minimum amount you need to take out

starting at a certain point, and I'll explain what that point is. But keep in mind, it's a minimum. You can always take out more if you want. The IRS would love it if you did.

That means more tax for them. And you can also take distributions out prior to the age at which

RMDs would have to start. There may be other rules and restrictions around it, but the point is,

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