​Are you planning to retire in the coming year? If so, this is likely an exciting time. You’re probably busy wrapping up final projects at work and planning for fun and exciting ways to fill your time after you retire.
 
While you may have a full plate right now, this is also a good time to analyze your financial strategy and take any outstanding planning steps. Of course, you may not know what steps you need to take. Retirement can be a significant financial challenge. It can be difficult to know what risks you may face.

​Turning 70 soon? If so, the IRS may have a gift for you. It’s required minimum distributions, also known as RMDs. As the name suggests, RMDs are mandated withdrawals from your retirement account. They’re required if you own a traditional IRA, 401(k) plan or similar qualified account.
 
As you likely know, traditional IRAs and 401(k) plans are treated as tax-deferred accounts. You don’t pay taxes on growth inside the account as long as you don’t take a withdrawal. Also, you may have made contributions to the account with pretax dollars. That means your entire amount of IRA or 401(k) dollars may be untaxed.
 
While tax deferral is a powerful tool, you can’t defer taxes forever. Eventually, the IRS wants to tax your accumulated growth. When you’re age 70½, the IRS requires you to take taxable distributions out of your tax-deferred accounts. The exception to this rule is the Roth IRA. Since Roth distributions are tax-free, they’re exempt from the RMD rule.