The article discusses the traditional guideline for retirement portfolios to shift from growth-focused assets to income-generating holdings as individuals age. This principle still holds validity, especially around the age of 70, despite the complex landscape of modern retirement accounts and tax implications like Required Minimum Distributions (RMD). It emphasizes that RMD calculations are based solely on total account value, suggesting that asset class should not dictate retirement investment choices. The article highlights the importance of managing tax impacts potentially caused by RMD when considering portfolio adjustments.
Required Minimum Distribution (RMD) percentages are based on total value, not on asset class, so it should not be a prevalent factor when choosing assets for a retirement portfolio.
RMDs exist so that the IRS can finally collect taxes on retirement account holdings that have been tax-deferred for years.
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