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Required distribution rules
You can't take it with you, and that definitely pleases the IRS. But the tax collector doesn't want you to leave a lot of your money to heirs, either. This forces senior citizens to dip into their nest eggs each year or pay additional taxes.
When you turn 70 1/2, you must begin taking money from your tax-deferred retirement accounts, such as a traditional IRA, workplace 401(k) or self-employed retirement plans.
It's no secret why the IRS wants you to start drawing down these accounts. Your money sat in the account for years, tantalizingly out of reach of the IRS as it accrued tax-deferred earnings.
The IRS has created tables to calculate these annual withdrawals, known variously as required minimum distributions, or RMDs, or minimum required distributions, or MRDs. Regardless of which acronym you choose (and here at Bankrate we're going with RMD), the payouts use longevity data and are designed to ensure that most of your retirement benefits are paid to you during your lifetime.
Although RMDs are triggered once you turn 70 1/2, you get a bit of timing leeway for your first required withdrawal. You have until April 1 of the year that follows the calendar year you turn 70 1/2, which is 6 calendar months after your 70th birthday.