RMDs: Required Minimum Distributions

Do you have money invested in a retirement account? If so, you may be responsible for taking Required Minimum Distributions (RMDs) every year to avoid IRS penalties. Unfortunately, the IRS guidance on the topic is quite confusing. I have attempted to assemble my own RMD notes into a helpful flowchart for determining if you are subject to RMDs. Please keep in mind that I am not a tax adviser or accountant. This is not tax advice. You are ultimately responsible for correctly calculating your RMD.

Why does the IRS require distributions?

Most retirement accounts confer some type of tax advantage. The federal government designed them to help individuals save for retirement. The government didn’t design them to establish multi-generational tax shelters. So, in most cases, when a retirement account holder reaches a certain age, or passes away, the IRS requires the account to start gradually liquidating.

Flowchart of RMD calculations
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What is Bitcoin?

Bitcoin is a monetary system. The best way to understand it is in comparison to two other monetary technologies: the gold standard and the U.S. Federal Reserve. In both of these systems, you need a way to control how much money exists (supply), and how people give it to each other (exchange). Bitcoin is simply one more way to implement supply and exchange of currency.

Bitcoin is also a thing that random d-bags talk about to each other, and to their bored dates. We will not discuss that aspect of bitcoin here but it’s actually the predominant societal aspect of bitcoin.

This article was originally posted on December 14, 2015 and updated on December 1, 2021.

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