Strategies for Limiting RMD’s

​Once you reach age 73, Required Minimum Distributions (RMD’s) must be accounted for with certain retirement plans. Below we detail a few ways to limit your RMD’s…

​RMD’s can create an unwanted tax burden, forcing you to withdraw retirement funds once you hit a certain age, whether you want to take those distributions or not. So you may find it helpful to make some of the following adjustments.
 

1. Roth Conversion - Roth IRA’s don’t have RMD’s, so you may want to convert some of your 401k or Traditional IRA funds into a Roth IRA in order to avoid having to take RMD’s on those funds. Just remember this conversion can create a taxable event, so be sure to plan and time this move accordingly.
2. Keep Working - The requirement to take RMD’s from your 401k can be delayed (in most cases) until you retire from that specific job. Other job 401k’s will still require RMD’s, but you can delay your current job 401k RMD by staying at that job, even if part-time.
3. Consider QCD’s - Qualified Charitable Donations (QCD’s) are a way to directly transfer funds from your retirement account into a qualified charity. So if you’re charitably inclined, you may want to avoid the tax hit on your RMD, or at least a part of it, by donating those funds to your favorite qualified charitable organization. This is especially beneficial for folks who donate money each year, but don’t have enough itemized deductions to see a benefit from their donation. A QCD gives you that net benefit.

 
As with all financial moves, it’s best to check with your financial advisor to ensure any strategies you employ are best for your long and short-term goals.