Other tax repercussions crop up down the road because balances build up, and RMDs get complicated
What’s the first thing most people do with their 401(k) after they retire? Nothing.
In short
The vast majority of individuals take zero action regarding their employer-sponsored retirement plans right after entering retirement. Leaving these balances untouched permits funds to keep growing, which creates unexpected tax burdens down the road. Furthermore, unmanaged account accumulation directly complicates future required minimum distributions for aging account holders.
Key points
- Inaction on post-retirement accounts exposes retirees to deferred and potentially costly…: Inaction on post-retirement accounts exposes retirees to deferred and potentially costly tax consequences.
- Ongoing balance growth complicates the mandatory distribution processes retirees must fac…: Ongoing balance growth complicates the mandatory distribution processes retirees must face later.
- Retirees must consider the future withdrawal implications of leaving their savings comple…: Retirees must consider the future withdrawal implications of leaving their savings completely untouched.