Summary
Required minimum distributions (RMDs) can unexpectedly increase retirees’ tax burden and reduce the value of their Social Security income. Because RMDs from tax-deferred retirement accounts count toward adjusted gross income, they can raise provisional income enough to make up to 85% of Social Security benefits taxable. Retirees with substantial savings who do not need their RMDs may face higher taxes simply because of mandatory withdrawals. To limit the impact, experts recommend avoiding unnecessary withdrawals, using Roth savings for additional spending when possible, and planning for taxes. Careful withdrawal strategies can help preserve more retirement income.
The Motley Fool
