Forced-withdrawal age
Also called: required minimum distribution, RMD
The age at which a country makes you start taking money out of a tax-protected account.
The other half of the tax-protected bargain. In exchange for shelter, many countries insist you begin withdrawing at a certain age, whether or not you need the money.
The logic from the government’s side is straightforward: the tax was deferred, not waived, and at some point they want it.
Two consequences worth planning for. The withdrawal is often taxable in the year you take it, so a large forced withdrawal can push you into a higher band — and it arrives on a schedule you do not control. And it can conflict with leaving money to grow or to pass on, which is why it belongs in estate planning rather than being discovered at the time.
The age, the calculation and the penalties differ substantially between countries, and they change. This is one of the areas where jurisdiction-neutral principles run out and you genuinely need the local rules, ideally from someone qualified.
The general point that does travel: money in a tax-protected box is not entirely yours to time. Know the date long before it arrives.
Words on this page
- Estate — Everything you own at the moment you die, before anything is distributed.
- Tax-protected box — Any account a government shelters from tax to encourage long-term saving.
Related terms
Covered properly in Learn.
This term appears in the glossary of The Quiet Fortune, Volume III.