The Silent Partner in Your Retirement Account (And How to Take Back Control)

So let me start with this.

If you've got money in a 401k or a traditional IRA, you've got a partner in that account.

You never met him, you never signed anything with him, but every time you take a dollar out, he takes his cut first.

It's Uncle Sam.

And I'm not saying that to be political.

I'm saying it because it's math.

24-7 Wall Street walked through it this week.

If you were born between 1951 and 1959, the IRS says you start pulling money out at 73.

Born in 1960 or later, it's 75.

Those are required minimum distributions.

And every dollar you pull out of a traditional IRA or 401k, taxed as income.

And Forbes ran a piece this week on the RMD mistakes people make.

Miss one, and the penalty is 25%.

25% of the money you were supposed to take out.

And for most folks, the deadline for this year's distribution is December 31st.

That's less than three months away.

Here's the part people don't know.

24-7 Wall Street had another one.

At 73, the IRS only makes you take about 3.7% that first year.

Sounds small, but that percentage goes up every single year.

The older you get, the bigger the slice, and every slice is taxed.

And if you're still working at 75, you might be able to skip the RMD on your current employer's 401k if the plan allows it.

But the plan from your old job doesn't qualify.

Your IRAs never qualify.

Miss one of those, and there's that penalty again.