Required Minimum Distribution (RMD)

Required Minimum Distribution (RMD) rules are pretty strict.

If you don’t want to face a hefty fine, you must withdraw a certain amount of money every year from tax-deferred retirement plans like 401(k)s and traditional IRAs after you reach age 70½.

The withdrawals you make are then taxed as ordinary income.

Not following these rules can lead to a penalty equal to 50% of the amount that should have been withdrawn, plus regular tax.