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Beware When Taking Dividends Out of IRAs as RMDs

Contributing money to an IRA or a 401(k) plan is easy. Taking the money out? Not so much.

Too many investors – including those with financial advisors – are making costly and often irrevocable mistakes when taking Required Minimum Distributions (RMDs), says Ed Slott, an accountant who has developed a thriving business educating financial advisors and individuals about the intricacies of Individual Retirement Accounts (IRAs).

Since many dividend investors plan to use their quarterly dividend checks to fund retirement income needs as well as meet their RMD obligations, knowing how to avoid these potentially expensive mistakes is very important. Here’s some advice from Slott.

More Accounts Than You May Realize

First, take an inventory of all your IRA and 401(k) accounts.

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