Are You Withdrawing From the Right Bucket in Retirement?

Required Minimum Distributions (RMDs) are one of those retirement rules that sound simple—but have a surprising impact on your income, taxes, and even your Social Security.

At Momentum Wealth, we believe you’ve worked too hard to let a government-mandated withdrawal throw your retirement off course. That’s why today, we’re walking through five things every retiree needs to know about RMDs—and how to plan around them with confidence.

1. What Are RMDs—and When Do They Start?

RMDs are mandatory withdrawals from your pre-tax retirement accounts. Once you hit age 73 (based on current law), you’re required to start taking money out—whether you need it or not.

The government gave you a tax break when you contributed. Now, they want their share.

Ignore the rule, and the penalty can be steep—up to 25% of the amount you should have withdrawn. That’s on top of the ordinary income tax you’ll still owe. Translation: This is not something to overlook.

2. Which Accounts Are Affected?

Any retirement account you funded with pre-tax dollars is subject to RMDs. That includes:

• Traditional IRAs
• 401(k)s
• 403(b)s
• TSPs
• 457 plans
• 401(a) accounts

Roth IRAs? Those stay untouched—for now.

3. How Are RMDs Calculated?

The IRS uses a life expectancy table to determine how much you’re required to withdraw each year. It’s not a flat percentage, and it changes annually.

Here’s some good news: You don’t have to take a withdrawal from every single account. As long as you meet the total RMD requirement across your pre-tax accounts, you can choose where the money comes from.

So if your required total is $8,000 and you have multiple accounts, you can take it all from one—or split it across several. Flexibility is built in, but strategy is key.

4. Should You Take It All at Once or Spread It Out?

Some retirees prefer to wait and take their RMD in one lump sum at the end of the year, letting their investments grow for as long as possible. Others choose monthly or quarterly withdrawals, mimicking the rhythm of a paycheck.

At Momentum Wealth, we often recommend the installment approach. It’s familiar, smooths out cash flow, and can make the transition into retirement feel less abrupt.

But the “right” answer? It depends entirely on your tax bracket, lifestyle needs, and investment strategy.

5. RMDs Can Trigger Taxes on Your Social Security

One of the biggest surprises for new retirees? RMDs can push your income high enough that your previously non-taxable Social Security becomes taxable.

The more taxable income you show, the more of your Social Security may be taxed—up to 85%. That’s why proactive income and tax planning before RMDs begin can help you avoid this domino effect.

If we start early, we may be able to reduce or even eliminate taxes on your Social Security in the years ahead.

Bonus Strategy: Qualified Charitable Distributions (QCDs)

If you’re age 70½ or older and giving to charity, a QCD is one of the most powerful ways to give.

A QCD allows you to donate directly from your IRA to a qualified charity. That withdrawal satisfies your RMD—but doesn’t count as taxable income.

It’s an elegant solution: You support causes you care about, reduce your tax liability, and fulfill your RMD requirement all at once.

Retirement Planning Is About More Than Rules—It’s About Strategy

RMDs aren’t just about math. They’re about intentional, forward-thinking planning. At Momentum Wealth, we integrate your RMD strategy into your broader retirement income, tax, and legacy plan—so you’re not just reacting, you’re moving forward with clarity.

Need help creating your written income plan or optimizing your tax strategy before RMDs begin? Let’s talk.

You’ve worked too hard to leave this to chance. Let’s build a plan that gives you the confidence you deserve and the freedom you’ve earned.

Always moving forward.