Required Minimum Distributions are mandatory annual withdrawals from certain retirement accounts, enforced by the federal government once you reach a specific age. These withdrawals apply to traditional IRAs, SEP and SIMPLE IRAs, and employer-sponsored plans like the Thrift Savings Plan. The purpose of RMDs is to ensure that taxes on these previously tax-deferred savings are eventually paid.
If you’re still federally employed at the age of RMD commencement, you can postpone RMDs from your TSP until retirement. However, RMDs from other retirement accounts are still necessary. Failing to withdraw the minimum amount results in a hefty federal penalty, although withdrawing more than the minimum is allowed.
