RMDs Without The December Scramble

The end of the year has a way of getting busy fast. Between holidays, travel, family gatherings, and everything else on the calendar, your retirement accounts may not be top of mind.

That is exactly why October is a good time to check on your Required Minimum Distribution, or RMD.

For many retirees, RMDs generally begin at age 73. After your first RMD year, the annual deadline is typically December 31. Waiting until the last few weeks of the year can create unnecessary stress, especially if you have multiple accounts or want to be thoughtful about where the money goes.

Make sure you know what is required

Your RMD is generally based on the value of your retirement account at the end of the previous year and an IRS life expectancy factor. If you have multiple retirement accounts, the rules for calculating and taking those distributions can vary depending on the type of account.

This is a good time to confirm the amount with your financial or tax professional rather than assuming everything is already handled.

Think about what you want to do with the money

An RMD does not necessarily mean you have to spend the distribution. Depending on your needs, you may use it for everyday expenses, add it to savings, reinvest what is left after taxes, or put it toward other financial goals. If charitable giving is already part of your plan, you may also want to ask about a Qualified Charitable Distribution, or QCD. For eligible IRA owners, a QCD can satisfy some or all of an RMD while directing money to a qualified charity.

Do not make it a December problem

RMDs are just one piece of your retirement income and tax picture. Reviewing them earlier gives you more time to coordinate withdrawals, charitable giving, and cash needs before the calendar gets crowded.

Want help making sure your retirement income strategy is working together?

Schedule a no-obligation consultation for a financial plan review to make sure your money and your retirement plan are on track.

Disclosures: Certified Financial Planner Board of Standards Inc. owns the certification marks Certified Financial Planner® and CFP®. Financial planning and investment management offered for a fee through Certified Advisory Corp, a registered investment advisor. The information contained in this article is not written or intended as financial, tax, legal or accounting advice. This material has been prepared for educational purposes only. Neither rankings and/or recognition by unaffiliated rating services and/or publications, nor the achievement of any designation or certification, should be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if CFG is engaged, or continues to be engaged, to provide investment advisory services. A full list of our disclosures can be found at www.financialgroup.com/disclosures and www.financialgroup.com/awards.