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The term Required Minimum Distribution (RMD) relates to the money you saved during your working years in an IRA, 401(k), or other tax deferred retirement plan. Federal law requires that when an individual reaches the age of 70 ½ years, he or she must begin withdrawing money from retirement accounts.  The government claims it wants you to have the use of your retirement funds during your lifetime, but its real goal is to make you convert your tax deferred funds to taxable income. During your working years, the law allowed you to put a portion of your income into a tax deferred retirement account every year.