The five years after · Retirement Transition Trap™
Required distributions
The point at which the account starts making decisions for you.
In short
At a set age, tax-deferred accounts must begin paying out whether or not the money is needed. Those distributions are taxable income, they grow with the account, and they arrive on a schedule that is not yours to choose.
How it works
Tax-deferred accounts postpone tax; they do not cancel it. At a set age the postponement ends and a minimum amount must come out each year, taxable, regardless of whether you need the income.
For a household that has been living comfortably on other assets, this is the moment the plan stops being fully within their control.
It interacts with everything already discussed
Required distributions add taxable income, which can raise the taxable share of Social Security, can cross a Medicare surcharge threshold, and closes the window that made Roth conversions cheap.
That is why the years before they begin matter so much: the size of the eventual distributions is partly determined by what was or was not done earlier.
The ages and factors change
The starting age has been changed by legislation more than once in recent years, and the calculation uses published factors that are periodically updated.
This page does not name an age for that reason. The durable point is that a date exists, that it is knowable for you specifically, and that the years before it are the ones with options in them.
This page explains a mechanism. It is not investment, tax or legal advice, and it deliberately quotes no thresholds, ages or rates. Those are set annually, and a page that named them would be out of date within a year.
Check where you stand
Ten questions, about two minutes
The readiness checklist covers this and nine other checkpoints, and tells you which you have already handled. No contact details required.
Where does this sit in your plan?
Fifteen minutes on the phone about your own situation, which is the part this page can’t tell you.