Does your retirement plan require you to take required minimum distributions (RMDs)? Here is a big myth that needs to be cleared up.

There’s a reason so many people are motivated to save for retirement in a traditional IRA or 401(k). These plans give you a tax break for your contributions, reducing your burden on the IRS in any year you make them.

Plus, unlike a regular brokerage account, you don’t pay taxes on investment earnings year after year in an IRA or 401(k) plan. Rather, you are taxed at the time of withdrawals, which delays the tax burden until retirement.

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If there is a downside to housing your retirement savings in a traditional IRA or 401(k), it will be subject to required minimum distributions, or RMDs, later. In the past, RMDs began at age 72, but recent changes pushed that age back to 73 for anyone born before 1960. And if you were born in 1960 or later, you’re liable for the first your RMD at age 75.

You might assume that RMDs have the potential to destroy your retirement finances because not only do they force you to spend money in your IRA or 401(k), but they also create an immediate tax burden. But both of these points are wrong ways of thinking.

You have more options for your RMDs than you think

It’s a big misconception that the money you take out of your IRA or 401(k) in the form of RMDs is money you have to spend. The IRS doesn’t care what you do with your money once it leaves your retirement account. It just needs to be eliminated in time to avoid a penalty.

But there is absolutely no requirement to spend your RMD if you don’t need the money. You can put it in a savings account, use it to open a CD, or invest it in stocks, bonds, and other assets. You just generally can’t put it back into a tax-advantaged account.

Additionally, you may have heard that you can’t use a traditional IRA or 401(k) to pass on wealth to your heirs because of RMDs. But again, RMDs don’t technically prevent you from doing that. You could take the money from those mandatory withdrawals and use it to set up an account for your beneficiaries.

You may be concerned about the tax impact of taking RMDs. But if you donate your RMDs to a registered charity, you won’t be taxed on your withdrawals. So if there are causes that are important to you and you don’t need the money, this is a route worth considering.

RMDs are not the end of the world

A big reason some people choose to save for retirement in a Roth account is to avoid RMDs. And you could always do that if you really expect it to be a problem. But if a traditional IRA or 401(k) makes more sense for you, based on factors like your current tax bracket, then RMDs aren’t necessarily the scary thing they’re often made out to be.

Sure, it would be nice if you could have complete autonomy to decide when some of your money should leave your retirement account. But if you manage your RMDs wisely, you may find that you can put them to good use without exponentially increasing your tax burden.