This New Bill Could Work Wonders for Retirement Savings Plans
Workers are encouraged to save for retirement to ensure that they have enough money to live comfortably later in life, especially since Social Security isn't designed to sustain seniors by itself. But the laws surrounding retirement savings can be restrictive.
Take required minimum distributions, or RMDS, for example. Though Roth IRAs don't impose them, all other tax-advantaged retirement plans mandate that savers start taking withdrawals starting at age 72. (That age used to be 70 1/2, but it changed recently.)
RMDs are calculated based on account balances and life expectancies each year. And neglecting RMDs is a big deal. Those who fail to take their RMDs risk a 50% penalty on any funds that aren't removed from a retirement plan. A senior who's on the hook for a $10,000 RMD but only removes $5,000 from their retirement account faces a 50% penalty on the remaining $5,000, or a $2,500 hit. Ouch.
Source Fool.com
