Discover the tips and strategies that will help you achieve your retirement goals.

I'm your host, James Canole, and this is the podcast dedicated to helping you retire well.

It all starts right here of Ready for Retirement.

I'm your host, James Knoll.

Today we're going to be talking all about required minimum distributions.

What are they?

How do you calculate them? What's the best way to

plan around these? Today's topic is everything you need to know about required minimum distributions.

So to start, what is a required minimum distribution or RMD, as you're oftentimes here

it referred to? An RMD is simply an amount that you are going to be

required to take out of certain types of accounts when you turn 72. So the reason for this is as you

put money into 401ks or traditional IRAs or 403Bs or any other pre-tax account, you get a tax deduction

for that. So if I make $100,000 this year and I put $10,000 into my 401k,

I'm only paying taxes on 90,000, even though I earned $100,000. That $10,000 I put into my 401k,

that was pre-tax, meaning I moved that money into my 401k before my income was taxed. So the IRS does this, so the government does this,

because they want to incentivize people to save for retirement. They want to incentivize you to put

money away for the future. So they don't have a whole bunch of broke people they have to take care of

when they are retired later on in their life. So the IRS is going to give you a tax break to save money to 401ks in IRAs as you're working.

And they're going to allow that money to grow tax-free or tax-deferred,

meaning as you're earning dividends or interest or capital gains on your money,

none of that is taxable, which is really nice.

You get tax-free deposits or you get to deposit money and it saves you money on taxes. You get tax deferred growth,

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