Required Minimum Distributions (RMD) | Roth vs Traditional | How RMDs Affect Military Finances, Inherited IRAs #145

The Military Money Manual Podcast

Did you know Required Minimum Distributions (RMDs) will be a factor in your future that you may not be tracking?

If you have any traditional TSP or IRA money, you'll be required to take a portion of that money starting at 73 (as of 2024, scheduled to go up to 75), and that distribution will be taxable income. This can affect how to withdraw from accounts in retirement and how you decide to contribute to your accounts now.

RMDs are also required for your beneficiaries on traditional IRAs you pass on (taxable income for them). While RMDs are required for some Roth IRAs for your beneficiaries as well, they're not taxed. (Inheritance tax is 2024 is $13,610,000. As long as you pass on less than that, no federal taxes. If it's all in a Roth IRA for example, no tax at all. If it's an inherited Traditional retirement account, your beneficiary owes taxes on the money as they withdraw funds per RMD schedule.)

Today main takeaways:

• RMDs are important for you to understand
• They affect your beneficiaries who receive your accounts after you pass
• Understanding RMDs may affect how you choose Roth or Traditional investments now
• If you inherit an IRA, it's complicated but important to get right. Hiring some fee-only help (links below) may be a great idea.

Links from today's episode:

• Military Financial Advisors Association (MFAA)
• Nectarine (includes 10% off military discount w/ this link)
• Military Tax Experts Alliance
• IRA RMD Calculator at Schwab (just one of many examples)
• IRA RMD Calculator at Vanguard (just one of many examples)
• Inherited IRA RMD Calculator

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