Once you reach a certain age, the IRS requires you to start withdrawing a minimum amount each year from certain retirement accounts, such as traditional IRAs and 401(k)s. These are called Required Minimum Distributions (RMDs). Failing to take your RMD, or withdrawing the wrong amount, can result in steep penalties.
At Servant Advisors, we help ensure you take the right amount at the right time while keeping your tax burden as low as possible.
RMDs are mandatory withdrawals from tax-deferred retirement accounts once you reach age 73 (as of 2023 law). They apply to:
Traditional IRAs
401(k) and 403(b) plans
SEP IRAs and SIMPLE IRAs
They do not apply to Roth IRAs while the original account owner is alive.
The IRS calculates your RMD based on your account balance at the end of the previous year and your life expectancy factor.
Without proper planning, RMDs can:
Push you into a higher tax bracket
Increase taxes on your Social Security benefits
Affect Medicare premiums
With the right strategy, you can:
Reduce your tax liability
Coordinate withdrawals with other income sources
Use RMDs strategically to fund lifestyle or gifting goals
Avoid the 25% penalty for missed or insufficient withdrawals
We begin by reviewing all your retirement accounts and calculating your RMD for the year. Then we design a withdrawal plan that coordinates with your other income sources, such as Social Security, pensions, and investment income, to help keep your taxes in check. We also explore options like qualified charitable distributions (QCDs) to satisfy RMDs in a tax-efficient way.
Our approach ensures that you stay compliant with IRS rules while making the most of your retirement income.
Your RMDs don’t have to be a source of stress. With the right guidance, you can meet IRS requirements while keeping more of your money working for you.
Schedule your free consultation today!
You could face a penalty of up to 25% of the amount you should have withdrawn
Yes. You can always take more, but the extra amount may increase your taxable income.
Not entirely for tax-deferred accounts, but planning early, such as through Roth conversions, can help reduce future RMDs.
Yes. The age requirement and rules have changed in recent years, so it’s important to stay updated.