As we get closer to the end of the year, it’s time to talk required minimum distributions or RMDs. It’s not something everyone is thinking about but if you’re 70 ½, the time to start pulling money out of your retirement accounts has arrived. Let’s talk about what you need to know with RMDs and how to minimize penalties and taxes.
The end of the year is upon us and you know what that means. Tis the season for RMDs.
December 31 is the deadline for required minimum distributions if you’re 70 ½ years old. That means you have to withdraw money out of your retirement accounts or else the IRS will hit you with a significant penalty. Are you prepared or is this surprising news?
With this being one of our final episodes of the year for No Payne, No Gain, we wanted to turn our attention to RMDs and make sure you aren’t surprised by these deadlines. We prepare our clients by making RMDs a part of their comprehensive retirement plan but that’s not the case for everyone. So make sure you understand what’s required, when it has to be done, and ways to avoid the ticking tax bomb that’s waiting for you.
Along those same lines of managing your money in retirement, we had a couple into the office recently that we wanted to share in our Spotlight segment. Courtney Dominguez, a Certified Financial Planner at PCM, worked with them as they went through a transitional phase by putting in a plan that kept them from worrying about a market crash and finding ways to generate income in retirement without having to touch their principal.
There’s a lot to discuss but some very important topics in store for this show. We’ve laid out the timestamps below to help you navigate to different discussions.0:32 – It’s that time of year for required minimum distributions.
1:08 – Do you find that clients plan for these RMDs at 70.5 or does it come as a surprise?
2:30 – Another big surprise is the ticking tax time bomb that’s waiting on your when you withdraw from those pre-tax retirement accounts.
3:04 – There are some tax strategies we use.
4:05 – You can give money directly to charity from your RMD and it’s tax-free.
5:28 – A little bit of planning for RMDs goes a long way. For example, using in-kind transfers to keep growing your account.
7:38 – Spotlight Segment with Courtney Dominguez
8:24 – The couple she recently met with is in a transitional phase with less income coming in.
9:31 – They had a fear of a correction in the stock market. Here’s what Courtney found in their plan.
11:16 – The plan was to have all income from Social Security or generated from their portfolio so they don’t have to touch the principal in their retirement accounts.
“It’s good to consolidate your retirement accounts because then all of a sudden you have to take like five different RMDs if you have consolidated your money.“
– No Payne No Gain Podcast
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