Required Minimum Distributions, or RMDs, have to be taken on an annual basis after age 72 if you were born after 1949, even if you do not necessarily need or want to withdraw the money. For a primer on RMDs, please press here.

For the purposes of the Planner, withdrawals from tax-advantaged accounts (e.g. traditional IRAs and 401(k)s) made to pay for modeled expenses from January onwards go towards your RMD requirement. If in the span from January to December you do not have enough withdrawn from retirement accounts, the Planner will model an RMD in December of that year to cover the remaining requirement.

For example, let's say you are age 72 upon entering January of 2030 and have an RMD of $100,000.

If in the course of January to December of 2030 you have automatically withdrawn $80,000 from your traditional IRAs and 401(k)s, the Planner will model an RMD of $20,000 in December of 2030.

If you instead never needed to touch your retirement savings in the year 2030, the entire RMD will be taken in December of 2030 ($100,000).

You may very well wonder how the unneeded income generated from the RMD is handled within the Planner. It is treated as "Excess Income," and abides by your selection in the Excess Income section of My Plan > Money Flows. What you choose in Excess Income becomes very important then, and you should make sure you've intentionally filled out that section.

For more info on Excess Income, press here.

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