Required Minimum Distributions Explained
The Federal Reserve has been steadily cutting interest rates since September 2025, bringing the Fed Funds rate down from 4.22% to 3.64% by early 2026. For retirees drawing income from traditional retirement accounts, this shift carries real consequences. Lower rates mean lower yields on bonds and money market funds — the very holdings many retirees depend on. That makes understanding Required Minimum Distributions, and planning around them, more important than ever. Required Minimum Distributions, or RMDs, are the amounts the IRS requires you to withdraw from most tax-deferred retirement accounts each year once you reach a certain age. The government gave you a tax break when you contributed to these accounts. RMDs are how it eventually collects. You deferred the taxes; now they come due. The rules governing RMDs changed significantly with the SECURE 2.0 Act, signed into law in December 2022. The starting age increased, penalties shrank, and Roth 401(k)s gained a major advantage. Whether you are approaching retirement or already taking distributions, understanding these rules can save you thousands in taxes and penalties.