A benefit of reaching retirement age is that you can withdraw money from your retirement accounts penalty free. However, you may also become subject to required minimum distributions (RMDs) at a certain age. RMDs are when you’re mandated to withdraw a certain amount from your retirement accounts every year. Said accounts include various types of IRAs and retirement plan accounts. How RMDs Work When you reach an age determined by the IRS, you must withdraw RMDs at a set time every year. The deadline for taking RMDs is usually the last day of the year. Accounts included in this requirement are: Traditional IRA SEP IRA SIMPLE IRA Retirement plan accounts Profit-sharing plans 401(k) plans 403(b) plans 457(b) plans Distributions can be taken monthly or in one lump sum if that’s preferable and people may choose to withdraw more than the required RMD amount. Failing to take RMDs can lead to steep penalties, which can eat away from your retirement savings. Account holders who miss RMD withdrawals must pay a percentage excise taxes on the required amount they don’t withdraw. That said, the penalty amount could