- Does a Roth Conversion Count as an RMD? Retirement Tax Guide
When it comes to managing retirement income, taxes can be one of your biggest – and most overlooked – expenses. Many retirees wonder whether converting their savings to a Roth IRA can help satisfy their required minimum distributions (RMDs) and reduce their tax burden. It is a smart question, but it is also a common… read more…
- 5 Smart Money Moves to Make With Your RMDs
Once you begin taking required minimum distributions (RMDs) at age 73, you must withdraw a set amount each year from your pre-tax retirement accounts. If you don’t need that money for living expenses, you can still use it productively. Many retirees choose to reinvest their RMDs in a taxable brokerage account, add to emergency savings,… read more…
- I’m 78 With $735k in My 401(k). How Should I Handle My RMDs?
The IRS mandates withdrawals from pre-tax retirement accounts once you reach a certain age. These are referred to as required minimum distributions (RMDs). For many retirees, RMDs don’t change much since they already take out more than the minimum to cover living costs. But, for those who want to withdraw less than the required amount… read more…
- How to Calculate the RMD for an Inherited IRA
Inheriting an individual retirement account (IRA) comes with specific tax obligations that can feel overwhelming during an already difficult time. One of the most important requirements to understand is the required minimum distribution (RMD) for an inherited IRA. This determines how much money you must withdraw each year. Unlike traditional IRAs, where distributions typically begin… read more…
- What Is the RMD for a 401(K) If You Still Work?
Retirement accounts like 401(k)s come with specific withdrawal rules. One of the most important is the required minimum distribution (RMD), which determines when you must begin taking money out. But if you’re still working when you reach RMD age, the rules can be different. Whether or not you have to take an RMD from your… read more…
- When Does the RMD Age Go Up to 75 Years Old?
For retirement savers preparing for required minimum distributions (RMDs), recent legislation has brought significant changes to the timeline. The SECURE Act of 2019 initially raised the RMD age from 70 ½ to 72. This gave retirees more time before mandatory withdrawals begin. Then, the SECURE 2.0 Act of 2022 introduced further adjustments. It increased the… read more…
- Can You Reinvest Your RMD into a Roth IRA?
Reinvesting a required minimum distribution (RMD) into a Roth IRA isn’t allowed directly, since RMDs are considered taxable income. However, if you have earned income and fall within the IRS income limits for Roth contributions, you can contribute to a Roth IRA using funds from any source—including money withdrawn to satisfy your RMD. RMDs can… read more…
- What Happens If You Don’t Take Your RMD by April 15?
While there are reporting requirements on your tax return due April 15 regarding your RMDs, the deadlines for taking these distributions out of your account have two other particular deadlines. By April 15th and beyond, you have already missed both deadlines for the prior year’s RMD, but you can act quickly to minimize any potential… read more…
- Can I Take My RMDs When My Portfolio Is Down to Make Them Smaller?
Unfortunately, you can’t time the market on required minimum distributions (RMDs). RMDs are calculated based on two factors: the value of your portfolio and your age, both as measured at the end of the previous year. So, for example, your required minimum distribution in 2025 is based on the value of your portfolio and your… read more…
- I’m 65 and Started Taking My $2,200 Social Security Check. Can I Still Do a Roth Conversion to Avoid RMDs?
You can make a Roth conversion at any age, and the money that you convert will be exempt from required minimum distribution (RMD) rules. If your only goal is to avoid required minimum distributions – for example, if you want to maximize the long-term value of your estate – this could potentially be a sound… read more…
- I’m Starting IRA Withdrawals at Age 65. Will They Count Toward My RMDs Later?
Withdrawals taken from an IRA at age 65 do not count toward required minimum distributions (RMDs) later on. RMDs apply only once you reach the required beginning age, which is either 73 or 75 depending on when you were born. Any distributions taken before that age are considered voluntary withdrawals and reduce the account balance… read more…
- What Is the Penalty for Not Taking Your RMD?
As you approach retirement, it’s important to consider how required minimum distributions (RMDs) from your IRA or 401(k) could impact your taxes. These withdrawals are intended for you to draw down your tax-deferred savings. Failing to take your RMD can lead to significant financial penalties. The IRS imposes a steep excise tax on any amount… read more…
- Do 401(k) Withdrawals Before I Turn 73 Count Toward My RMDs?
If you have a tax-deferred retirement savings account such as a 401(k), taking earlier or larger withdrawals than required won’t directly reduce future mandated distributions. However, since pulling money out now will likely reduce the future balance of your 401(k), it could indirectly reduce the size of the compulsory distributions. That’s because these obligatory withdrawals… read more…
- 6 Strategies to Limit Your RMD Distributions
Required minimum distributions (RMDs) are yearly withdrawals from tax-deferred accounts that raise your taxable income and can lead to penalties if missed. A financial advisor can help you create an effective RMD strategy to minimize your tax liability and manage your retirement savings. Here’s a roundup of six strategies to get started. 1. Consider Roth… read more…
- I’m 76 With $460k in my 401(k). How Should I Handle My RMDs?
Required minimum distributions, or “RMDs,” are a tax law that every retiree needs to understand. Specifically, under the RMD law you can’t just leave your money in place indefinitely. You need to start taking withdrawals from qualifying pre-tax retirement accounts starting at age 73, and you need to pay taxes on that money. So it’s… read more…
- RMDs Are Due December 31. What Happens If I Don’t Take a Distribution?
In almost all cases the IRS enforces its rules through fines and penalties. This is the case of Required Minimum Distributions (RMDs). As always, your RMDs are due by the end of the year. In this year, if you don’t take out the minimum distributions by December 31, 2024, the IRS will penalize you with… read more…
- How Can I Reduce the Amount of My RMD Payments?
In the year that a required minimum distribution (RMD) is due from a 401(k), IRA or other pre-tax retirement account, you must withdraw a certain amount and pay taxes on it. If you don’t, you’ll face a penalty of up to 25% of the amount you were supposed to withdraw. But what if you don’t… read more…
- I Waited to Take My First RMD Until April 1st. Will This Affect My Second Year’s RMD?
Unlike most personal finance questions, the answer to this one is short and simple: yes, waiting until April 1st to take your first RMD will affect the amount of your second year’s RMD. The IRS rules on required minimum distributions – RMDs – demand that anyone turning 73 in 2024 withdraw a certain minimum amount… read more…
- How a 457(b) Plan Works After Retirement
Retirement planning involves understanding what happens to your savings when you finally stop working. If you’ve been contributing to a 457(b) plan during your career, knowing how this account functions after retirement is essential for making informed financial decisions. Unlike other retirement accounts, a 457(b) plan offers unique advantages and flexibility when you’re ready to… read more…
- I’m 60 With $1.1 Million in an IRA. Is It Worth Converting $100,000 Per Year to a Roth to Avoid RMDs?
Required minimum distributions, or RMDs, are a problem for some retirees. If that’s your situation, a Roth conversion may be able to help. The advantage to switching your money from a pre-tax portfolio, like a traditional IRA, to a post-tax Roth IRA is an end to RMD concerns. Since you’ve already paid taxes on the… read more…
- I’m 65 With $850,000 in an IRA. Is It Worth It to Convert That Money to a Roth to Avoid RMDs?
Required minimum distributions (RMDs) from pre-tax retirement accounts can have a number of unintended consequences. These mandatory withdrawals can push you into a higher tax bracket, reduce your investment flexibility, increase your Medicare premiums and result in more of your Social Security benefits being taxed. If you’re planning to convert IRA funds to a Roth… read more…
- This Is My First Year Taking RMDs. What Should I Do With the Money If I Don’t Need It Yet?
Anyone with a 401(k), traditional IRA or similar tax-deferred retirement account eventually is going to face the requirement to start taking required minimum distributions (RMDs) from their accounts. The IRS has allowed you to have what can be decades of tax-free growth in the account, along with years of tax deductions, so they eventually requiring… read more…
- I’m 62 With $1 Million in a 401(k). Should I Convert $100,000 Per Year to a Roth IRA to Avoid RMDs?
Retirees with significant assets often have to plan around required minimum distributions (RMDs). If you already have sufficient income and don’t need the money in a pre-tax portfolio, annual RMDs can cost you significantly in otherwise unnecessary taxes. If you have $1 million in a 401(k), for example, the IRS could require you to withdraw… read more…
- When Should I Take My First RMD?
You may not be thinking about required minimum distributions (RMDs) throughout your career, but chances are that they’ll be on your mind once you hit your 70s. RMDs are a critical part of retirement planning. A financial advisor can help you prepare for these mandatory withdrawals, which can have a significant impact on your taxes.… read more…
- I’m 55 With $900,000 in an IRA. Should I Convert $100,000 Per Year to a Roth to Avoid RMDs?
At age 55 with $900,000 in a traditional individual retirement account (IRA), converting $100,000 per year to a Roth IRA could help reduce required minimum distributions (RMDs) and related taxes. Taking an incremental Roth conversion approach can effectively distribute the tax impact. Although Roth conversions do create their own tax liabilities, paying those taxes now… read more…