Tax-favored retirement accounts like IRAs and 401(k)s can save you thousands of dollars in taxes over the course of your career, because they offer tax deferral on the income and gains that your investments produce while they’re inside the account. However, the IRS doesn’t let you get away with tax-deferred growth forever. When you turn 70-1/2, you have to start taking required minimum distributions (RMDs) from traditional IRAs and 401(k) accounts, and you have to pay tax on the amount that you withdraw. However, once you understand RMDs you’ll see there’s a way to soften the blow.