Required Minimum Distributions:
My parents are considering retiring this calendar year and because of this have been doing a good deal of research and asking me questions associated with retirement. One question which has came up was about required minimum distributions (RMDs). What are RMDs? An RMD is the amount that an individual is required to take out of pre-tax retirement accounts such as traditional IRA or 401(k) accounts. Now that we know what a required minimum distribution is, when do we need to make a withdrawal from the pre-tax accounts? Turning 70 and 1/2 years old is what triggers the need for RMDs and they need to be withdrawn out of your retirement account by April 1st of the following year. One consideration I do want to mention is that your second year's RMD is needed to be taken out in the next calendar year after you turn 70 and 1/2 so if you wait until after December to take your first distribution you will have to include 2 distributions in your next year's tax return.