The Importance of RMDs

Q. Why are RMDs Important?

A. Required minimum distributions are obviously important to plan participants, retirees and beneficiaries. They also are an important consideration for plan administrators and service providers. 

But RMDs also are important to the government, since they are relevant to taxation. Tax-deferred benefits are taxable when they are withdrawn/realized. Having an RMD requirement in place guarantees that the government eventually will realize revenue on benefits for which tax deferrals took place.