Individuals are subject to the required minimum distribution (RMD) rule for funds within their 401k accounts, as set out by the IRS when they turn 70 ½. The RMD refers to a minimum annual amount which must be withdrawn from the individual’s qualified plans. The RMD amount is determined by calculating the individual’s life expectancy and dividing the prior year’s market value of qualified retirement plans by this figure. RMDs are calculated annually.
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