The IRS divides a $500,000 IRA balance by 26.5 at age 73, forcing an $18,900 withdrawal whether you need the income or not.
That RMD stacks on Social Security and pension income, potentially triggering higher Medicare IRMAA premiums and making up to 85% of benefits taxable.
A Qualified Charitable Distribution sends up to $108,000 directly to charity, satisfying your RMD while keeping that amount out of adjusted gross income.
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Let's assume that you did everything right for decades with your investments, all while saving consistently, investing patiently, and never touching them. Now, you have the IRS coming in and telling you how much of the money you have has to come out of your accounts every year. Required minimum distributions are pretty much exactly what they sound like in that the IRS sets a minimum amount of money you have to pull out of a traditional IRA every year once a retiree hits 73. If you have $500,000 in an account, the first RMD number is going to start at roughly $18,868.