3 Money-Smart Ways to Use Your RMDs

Put the money you are required to take out of retirement accounts back to work.

One hundred dollar bills
(Image credit: Getty Images/iStockphoto)

Some would call it a nice problem to have. But for many retirees, it's a problem nonetheless to figure out what to do with required minimum distributions from an IRA when you don't need the money right away but want to preserve some of the IRA's tax advantages. Once you turn 70 1/2, you must take annual distributions based on the value of your account and your life expectancy. Some options to consider:

Reinvest. Municipal bonds or muni bond funds will provide income that's usually exempt from federal taxes and, in some cases, state and local taxes, too.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

To continue reading this article
please register for free

This is different from signing in to your print subscription

Why am I seeing this? Find out more here

Sandra Block
Senior Editor, Kiplinger's Personal Finance

Block joined Kiplinger in June 2012 from USA Today, where she was a reporter and personal finance columnist for more than 15 years. Prior to that, she worked for the Akron Beacon-Journal and Dow Jones Newswires. In 1993, she was a Knight-Bagehot fellow in economics and business journalism at the Columbia University Graduate School of Journalism. She has a BA in communications from Bethany College in Bethany, W.Va.