Reframe RMDs as Our Pension

I've been reading about concerns with managing RMDs (Required Minimum Distributions) in the future.  RMDs are requirements by the IRS to withdraw a certain amount from IRAs, 401Ks and similar retirement accounts.   The main concern is the significant increase in taxable income versus if the retiree was not required to withdrawal the funds.

I understand the tax implications.   However, I decide to reframe the RMDs as a pension payment instead of an involuntary withdrawal.  If I think of an RMD as another pension payment, I don't worry about the payment causing an increase in taxes.  It's just a fact of life.  More income equals more taxes.   

This is especially true for IRA/401Ks that are less than $1 million since the RMD is about $38,000 per million at 73.   Most people probably will have less than $1 million in their IRA/401K.   If I had over $2 million in an IRA/401K, I'd start worrying and considering whether Roth conversions or other strategies to reduce taxes should be used.

This reframing ignore the impact of inherited IRA/401Ks on the beneficiaries, but that is a topic for another post.

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This is not financial, RMD, nor retirement advice. Please consult a professional advisor.

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