The Unseen Tax Bomb Waiting for Retirees The quiet horror facing millions of American retirees is not about Social Security's solvency or Medicare's affordability, but a stealthy tax trap lurking in the most mundane corner of retirement planning: Required Minimum Distributions (RMDs).
A recent scenario has highlighted this little discussed issue, and it's a stark reminder that even with significant nest eggs, retirees are not insulated from the federal taxman. For a 73 year old retiree with $1.
5 million in their traditional 401(k), the first RMD arrives at age 75, calculated using the IRS Uniform Lifetime Table divisor of 25. 5.