A short YouTube video by Craig Wear, CFP® explaining how required minimum distributions (RMDs) from IRAs and 401(k)s create taxable income each year. The speaker warns that as account balances grow, RMDs increase and can cause substantial lifetime tax burdens if not managed.
So here's the deal. When you have a large IRA or any size IRA and you get to the age where you have to start taking required minimum distributions, that those RMDs create taxable income every year to you. And Sometimes when your IRAS 401ks are big enough, they end up causing a big tax problem and you end up paying a lot more tax over your lifetime because that balance just grows and grows. The RMDs compound and get bigger and bigger and bigger.
