Skip to content
Home » Valentine's Day » There are rules about withdrawing money from you 401k

There are rules about withdrawing money from you 401k

Deciding to retire requires lots of decisions.

401k nest

You may have saved money in your 401k, but aren’t ready to spend it.

Worker’s Compensation: Everything to know about applying for benefits

Minimum distribution

401k or an individual retirement account (IRA) are subject to rules set by the IRS. It required that you take a minimum distribution. Read more about it here.

If you want to see your money grow, rather than spend it, you can reinvest your minimum distribution, as long as it isn’t into another tax-advantaged account.

Required minimum distribution (RMD) is the minimum amount you must withdraw from your account each year.

When you reach age 72, you have to make RMDs from certain tax-advantaged retirement accounts. These include:

  • profit-sharing plans
  • traditional and Roth 401k plans
  • 403(b) plans
  • 457(b) plans
  • traditional IRAs
  • SEP IRAs
  • simple IRAs

If you don’t take distribution, or it isn’t big enough, you’ll have to pay 50% excise tax on the amount that wasn’t distributed as required.

Finger Lakes Partners (Billboard)

Tax Rebate: When can Georgia residents expect a rebate check?

Where can I invest my RMD?

Your RMD can be invested in any account or asset that is not a tax-advantage retirement account.

For example, buying stocks, bonds, real estate, or other financial assets. If you buy stock to later sell or interest bonds will be taxed.

The exception to this rule is the Roth IRA. Future withdrawals from this account are tax-free.

Rent prices: Why do prices keep going up? Is a housing crisis next?

Categories: News