All retirement accounts except Roth IRA have RMD. Interestingly, Roth 401 (k), although taxed in the same way as Roth IRAs, have RMDs. But you can get around this requirement by transferring your Roth 401 (k) funds to a Roth IRA before you turn 72.
For most people, RMD won’t be much of a problem. You will likely need to withdraw more from your retirement accounts than you would be required to withdraw anyway in any given year. But those who hope to keep their savings in their retirement account for as long as possible may need to withdraw more than they originally planned.
You don’t want to skip the RMD – it will cost you a 50% penalty on the amount you should have withdrawn. It is certainly more than the taxes you would have paid if you had done what you are supposed to do.
Familiarize yourself with how RMDs work and, if you are approaching the age when you will need to start taking them, estimate how much you will need to withdraw. If this is going to increase your tax bill, be sure to plan for that additional expense.
You won’t be able to avoid these expenses in retirement, but planning them well in advance can prevent a lot of inconvenience. If you haven’t already, review your retirement plan now and adjust it accordingly. It may mean that you need to increase your pension contributions. But years from now, when the bills start rolling in, you’ll be glad you did.