There’s a plethora of tax advantaged retirement accounts out there today. Enough that the acronyms and numbers can get really confusing…
- Profit sharing
- SEP IRA
- SIMPLE IRA
Just to name a few – trust me, there are more. The reason? The government wants us to save for our own retirement. And by offering an array of tax advantaged accounts, they’re incentivizing us to put money away.
But while the tax advantages are great, the government won’t let us shelter our money from taxes forever. When you turn 70 1/2, they’ll force you start taking withdrawals called required minimum distributions, or RMDs. If you don’t you’ll be subject to a hefty 50% penalty.
This poses quite a problem for many retirees, since each withdrawal raises their tax liability for the year. So for those of you who want to keep Uncle Sam’s grimy mitts off of your hard earned retirement funds, here are six ways to minimize your RMDs: