Summerlin Benefits Consulting Q&AAnswer
Nov 22, 2024 - 02:22 PM
Required Minimum Distributions (RMDs) can significantly affect retirees' tax brackets. Once retirees reach age 73, they must begin withdrawing from pre-tax retirement accounts like IRAs or 401(k)s. These mandatory withdrawals increase taxable income, which may push retirees into higher tax brackets, even if they don't need the funds. This can lead to a larger tax burden, particularly as tax rates and brackets are set to change in 2026. RMDs can create unexpected tax challenges by raising taxable income and potentially increasing the overall tax rate for retirees.
