The average 401(k) balance is about $351,242, but taxes can reduce how much of that money is available to spend. 1 Required minimum distributions (RMDs) can create taxable income once they begin, potentially increasing your tax bill. Planning when and how you take money from your 401(k) could help limit the tax impact over retirement.
The RMD Rule That Can Raise Your 401(k) Taxes
Traditional 401(k) savings cannot stay in the account indefinitely. RMDs generally begin at age 73 for those born between 1951 and 1959, and at age 75 for those born in 1960 or later, although some 401(k) participants who are still working can delay RMDs until…
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