Tax TreatmentQuestion 713 of 716
Required minimum distributions (RMDs) generally force the owner of a traditional qualified plan to begin taking taxable distributions:
a.Only after the owner reaches age 90
b.At age 40, so that the government can begin collecting income tax on the deferred funds much earlier in life
c.Only after the owner's death
d.At a specified age set by law (such as 73), so the IRS eventually collects tax on the deferred funds
Explanation
RMDs require withdrawals to begin at the age set by law (currently 73) so the deferred, pre-tax funds are eventually taxed. They do not begin at age 40 and are not deferred to age 90, and they start during the owner's lifetime rather than only after death.
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Reviewed by John Zihao Zhang — California-Licensed Life Insurance Agent (CA Dept. of Insurance License #4396095 — verify)