In discussions involving retirement, you may have come across the phrase "required minimum distributions" or "RMDs." But what are they?
The IRS requires you to start taking money from certain types of retirement plans once you reach a specified age. You must receive these withdrawals ... whether you need the money or not.
Starting in 2023, the age at which retirement account owners must begin taking RMDs increased from 72 to 73. (If you turned 72 in 2022 or earlier, you must continue to take your RMDs as scheduled.)
What can I do with my distribution?
Realistically, you have two options when you receive a required minimum distribution. You can spend the money. It’s yours, of course. Or you can keep your hard-earned dollars working for you. For example, you can use your RMDs to fund:
- Life insurance.
- Mutual funds.
Confused about how much to withdraw or what to do?
Figuring out the correct required minimum distribution to take can be daunting, and doing so incorrectly could cost you money. You’ll incur a 25% IRS penalty on any amount of the RMD you fail to take.
One solution? Consolidate your retirement accounts with Modern Woodmen. Your Modern Woodmen representative will walk you through the steps to combine your retirement accounts. That can mean:
- Fewer financial statements to review.
- Fewer 1099 income tax forms to handle.
- Less worry about incurring an IRS penalty.
Call a Modern Woodmen representative today to find out more!
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Saving for college is a priority for many families today, and a 529 plan gives you the ability to save for higher education expenses while receiving tax benefits not found in other investment options.