When a person turns 70 ½ they are required to take out required minimum distributions (RMDs) from their retirement accounts. One thing to be concerned about are the tax implications for the additional income coming from the distributions. It is a good idea to think ahead about the timing of taking out RMDs. Under current tax laws a person gets extra time to take their first RMD. Spreading out the first two RMDs into different years could keep a person out of a higher tax bracket. The rules about RMDs can be complex so it is a good idea to consult with a professional estate planner for further guidance.
See Karen Damato, How to Ease the Tax Bill on Initial IRA Distributions, The Wall Street Journal, October 18, 2015.
Special thanks to Jim Hillhouse for bringing this article to my attention.
