A Useful RMD Tool
Whether a divorce is part of your life’s plan or not, we all need to pay some attention to when and how we will pull resources to fund the “autumn years.” As we have noted before, most people don’t have annuity or defined benefit monthly income aside from social security. And, we have been starting to see articles discussing what social security cuts will look like in 2032 unless Congress starts to figure out a solution.
That aside, while there are lots of articles on how much we can or should draw from 401K and IRA defined contribution plans, attention needs to be paid to RMDs, the Required Minimum Distributions which you must take starting at age 73 if you don’t want to pay supertaxes on the account balance. As with all withdrawal strategies this is something to be refined with a tax specialist who understands your individual tax history. But, if you are a planner the AARP has an on-line calculator to help you assess what your RMD will look like. Here it is:
As an example, if your pre-tax defined contribution accounts sum to $500,000 and this is the year you hit 73, it looks like you need to draw at least $18,000 in 2026 to avoid penalties. That’s $18,000 that will be taxable at regular rates.
Another useful article is here: Congress research arm warns Americans on 401(k), IRA penalty