Looking at RMDs in Retirement? 3 Tips to Manage Them.

There are a few downsides of having your retirement savings in a traditional IRA or 401(k). First, you'll have to deal with taxes on the money you withdraw. Secondly, you may not get to decide when to take withdrawals.

Once you're old enough to be subject to required minimum distributions (RMDs), the IRS will effectively force you to withdraw money from your retirement savings or otherwise face a steep penalty -- 25% of whatever sum you fail to remove. So blowing off RMDs isn't a good option.

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But that doesn't mean RMDs have to upend your finances, either. Here are three ways to keep them manageable.

1. Put them on autopilot

It's not a given that you'll remember to take RMDs each year, especially if you opt to put them off until December. To avoid what could be a huge penalty, depending on your IRA or 401(k) balance, it helps to put your RMDs on autopilot.

Most financial institutions let you set up automatic RMDs. You can typically arrange for money to be withdrawn from your account monthly, quarterly, or annually, so you don't have to worry about missing your RMD deadlines.

2. Use QCDs to keep your taxes lower

If you don't need to withdraw from your savings -- or withdraw to the extent that your RMDs mandate -- you may be in a good place financially. If you're looking to share the wealth and be charitable, there's an easy way to do so while minimizing your RMD-related tax burden.

Qualified charitable distributions (QCDs) allow you to transfer money directly from an IRA to a registered charity. In doing so, you can satisfy your RMD requirement without incurring taxes.

QCD limits change annually, but they tend to be pretty high. This year, the limit is $111,000.

3. Plan your splurges

If the IRS is forcing you to take RMDs, you might as well make the most of that money. Once you know how much you need to withdraw from your savings in a given year, you can put it to good use so it doesn't feel like a burden.

Some options:

• Update your home with new flooring or furniture.
• Treat yourself to a theater subscription.
• Take your children and grandchildren on a multigenerational trip.
• Buy new kitchen appliances.
• Outsource home maintenance tasks you don't want to do.

RMDs don't have to be a huge hassle in retirement. The key is to plan for them to avoid penalties, use strategies like QCDs to minimize the tax blow, and find creative ways to put your forced withdrawals to good use.

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