Your IRA Needs Dividend Stocks

n your quest to save for retirement, tax-favored retirement accounts are valuable tools to help you set aside and grow your money. But eventually, all good things must come an end, and regardless of whether you want to, you need to start taking money out of your traditional IRAs and 401(k) accounts. If you don't, the IRS will gladly sock you with a penalty you simply can't afford to pay. And with the recent volatility we've seen in the stock market, you need to make sure your retirement investments will produce enough income to give you the cash that the IRS makes you take out.

When lawmakers created IRAs and employer retirement plans, they knew that taxpayers wouldn't want to pay taxes any sooner than they had to. So they included provisions in the laws that govern retirement accounts to force people to take their money out under certain conditions, regardless of whether they actually needed the money. These required minimum distributions apply to two groups of people: accountholders who will be age 70 1/2 or older at the end of 2011, or those who inherited IRAs and weren't eligible to do a spousal rollover into their own accounts.

Source: Motley Fool

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