Marguerita-Cheng-2-What is a required minimum distribution RMD
Marguerita Cheng explains that required minimum distributions (RMDs) are mandatory withdrawals from tax-deferred retirement accounts beginning at age 72, designed to ensure the IRS collects taxes, with steep penalties for missed withdrawals.
Video Transcript
The topic of RMD or required minimum distributions, what these are, these are required distributions that, individuals must satisfy from their retirement accounts.
RMD would kick in at age seventy and a half.
Now RMD is at age seventy two. Why do we have to do this? So this typically applies to pretax accounts like IRAs, four three b's, four zero one k's. This money is gone on a tax deferred basis. Essentially, the IRS, you know, wants you to start taking money out. If you don't take the money out, you will incur a fifty percent penalty of the amount that you need to withdraw. So it's important to make sure that, you don't overlook anything and you do take your RMT out from each account.
