Secret Destroyers of Retirement: Will You Make These 20 Mistakes?

3. Failing To Take Required Minimum 401K Distributions

It’s crucial to note that during retirement, there exists a mandatory minimum for annual 401k withdrawals. Many individuals mistakenly opt for amounts below this minimum, hoping to defer withdrawals to subsequent years. However, procrastination comes with consequences. Failure to meet the required minimum can incur hefty tax penalties, surpassing what’s financially manageable.

Tax penalties could soar up to 50% of the discrepancy between the mandated and actual distributions. The IRS mandates the commencement of 401k withdrawals at age 70 and a half. Conversely, Roth IRAs don’t impose withdrawal obligations until after the owner’s demise, where the listed next-of-kin assumes responsibility for withdrawals. For further insights, consulting the IRS website, featuring a comprehensive FAQ section proves invaluable.