Hate Having to Take Required Minimum Distributions? Here's Some Good News
There are tax benefits to contributing money to a retirement savings plan like a 401(k) or IRA. If you fund a traditional 401(k) or IRA, the money you put in is tax-free, and once invested, gains in your account are tax-deferred until you take withdrawals. With a Roth 401(k) or IRA, your money grows completely tax-free and withdrawals are tax-free, as well.
But the IRS doesn't want you benefiting from those tax breaks indefinitely, so once you reach age 72, you must remove a certain portion of your 401(k) or IRA balance each year or face costly penalties. The amount of money you're forced to remove is known as your required minimum distribution, or RMD, and it's calculated each year based on your account balance and life expectancy.
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Source Fool.com
