- At a certain age, you must take a yearly required minimum distribution (RMD) from tax-deferred retirement accounts such as traditional, rollover, or inherited IRAs, as well as most 401(k) and 403(b) plans. SECURE 2.0 changed the age at which you need to start taking RMDs from 72 to 73.
- The IRS taxes RMDs as ordinary income, and they count toward your total taxable income. RMDs could push you into a higher tax bracket and may impact the taxes you pay for your Social Security or Medicare.
- You may be able to reduce your tax liabilities through a qualified charitable distribution (QCD). Another way to reduce your IRA balance—and therefore your RMDs—is through Roth conversions.