Smart Money With Sam

The IRS forces this at 73, and most people never saw it coming.

A Required Minimum Distribution is what happens when the tax deferral on your 401(k) or traditional IRA eventually runs out. Starting at 73, the IRS requires you to withdraw a specific amount each year, and that money is taxed as ordinary income.

What catches many retirees off guard is how that withdrawal interacts with everything else.

It adds to your total income, which can cause more of your Social Security to become taxable. It can also push you into IRMAA territory, meaning your Medicare premiums increase based on your income from two years prior. A single required number can set off a cascade of unintended costs.

Skip your RMD? The IRS levies a 25% penalty on whatever you failed to withdraw.

The encouraging part: the years before 73 are where the most meaningful planning takes place. Roth conversions, thoughtful withdrawal sequencing, and proactive tax strategy can all help reduce the impact before distributions ever become mandatory.

Hit follow to keep learning how to plan smarter for retirement.

All content presented is for educational purposes only and should not be construed as a solicitation or offer to sell securities or provide investment, tax, or legal advice. All examples are hypothetical, for illustrative purposes only, and are merely arithmetic calculations. They are not representative of the performance of any type of investment, security, or strategy offered by the firm. Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal. Hypothetical returns do not reflect actual trading and may not be indicative of the performance of any specific investment. They are based on assumptions and estimates that may not be accurate or applicable to your individual situation. Always consult with a qualified financial advisor before making any investment decisions.

Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC's Investment Adviser Public Disclosure website, www.adviserinfo.sec.gov.

Foundation Wealth Partners is a financial advisor serving Gen X and older Millennials in their 40s to mid-50s.

Missing this window could cost you in retirement.

There is a specific stretch of time for many retirees, right after income from work stops and before Social Security begins, where lower tax brackets open up and Roth conversions can make a significant financial difference.

Most people either do not know the window exists or underestimate how quickly it closes.

The amount to convert each year matters just as much as the decision to convert at all. Crossing into a higher bracket or triggering additional taxation on Social Security benefits can quietly offset the advantage you were trying to build.

Getting it right means looking at your full income picture across multiple years, not just a single tax return.

For busy professionals and executives who already have a lot of financial complexity to manage, this is one of those decisions where the cost of waiting or guessing can compound over time.

If you want to know whether the window is open for you right now, the link in my bio gets you on my calendar.

All content presented is for educational purposes only and should not be construed as a solicitation or offer to sell securities or provide investment, tax, or legal advice. All examples are hypothetical, for illustrative purposes only, and are merely arithmetic calculations. They are not representative of the performance of any type of investment, security, or strategy offered by the firm. Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal. Hypothetical returns do not reflect actual trading and may not be indicative of the performance of any specific investment. They are based on assumptions and estimates that may not be accurate or applicable to your individual situation. Always consult with a qualified financial advisor before making any investment decisions.

Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC's Investment Adviser Public Disclosure website, www.adviserinfo.sec.gov.

Foundation Wealth Partners is a financial advisor serving Gen X and older Millennials.