Ask an Advisor
Have a question about finance?
How do I reduce my required minimum distributions (RMDs)?
An idea you can consider when you reach age 70½ is IRA to charity transfers. This allows you to transfer the RMD to a charity, but not have to pay taxes on the distribution. Granted, this is a strategy to apply once you reach 70 1/2 and congress may change the rules by then. (There was a debate before it was decided to renew it for 2013) But if you have charitable intent and have enough to live on without the RMD payment, it would be an option to consider.
The other advantages of this strategy is allows you the flexibility of stopp...
While I will provide a few thoughts from a wealth advisor’s perspective, I would encourage communication with your wealth advisor, CPA and tax/estate planning attorney to develop a plan to address the planning and tax implications.
Depending on your own goals, considering charitable donations may make sense depending on the eligibility of your assets. Many charitable planning structures exist (i.e., charitable remainder trusts, donor advised funds, etc.) that would bring you both tax benefits and perhaps help you fulfill any c...
Brian FrederickChartered Financial Consultant, Certified Financial Planner, , Chartered Life Underwriter
The other straightforward answer to your question would be to have your sole beneficiary for your IRAs be a spouse who is more than ten years younger than you. This allows you to move from a Single Life Expectancy to a Joint and Last Survivor Expectancy which results in a smaller RMD amount. How small depends on the age of your spouse.
While this option probably isn't realistic for most people, I would pose a question back to you: What is truly important to you about reducing your RMD amount?
Like Jeff mentioned in his...
There are several ways you can reduce your RMDs over time. You have already identified the most obvious and effective (Roth and regular withdrawals). Some of the other advisors have accurately identified other minor strategies:
· Charitable giving – If you were already over 70 1/2, you could make QCDs from your IRA of up to $100k. But you have several years yet and this provision must be renewed. Currently, you could offset taxable distributions with charitable giving (assuming you itemize, don’t exceed the giving limit and a...
In addition to the excellent answers given by others (especially Benjamin Gurwitz), including the following options:
Marry a Younger Spouse
Asset Location (low-growth in IRA, high-growth in taxable/roth accounts)
Roth conversions (which do mean paying more taxes now, and if this pushes you into a higher current bracket, possibly not a great idea, tough estate-tax issues may become relevant and a great reason to consider pre-paying taxes via Roth conversions)
There is one more really big way to reduce/postpone RMDs: ...
Guy BakerChartered Financial Consultant, Accredited Estate Planner, Certified Financial Planner, Chartered Life Underwriter
Yes - consider a lifetime annuity. This would make the payments less than your RMD over your lifetime.
There is a unique strategy some have used which can eliminate your IRA and RMD. Essentially, you would put the money into a profit sharing plan and have the plan contribute systematically, capital to a life insurance policy.
You remove the policy from the plan by buying it out for the appraised value. This has the added advantage of providing a significant death benefit but it also gives you the ability to take tax free income on...
What a great problem to have....too much money!!
1st off--realize that you didn't get $4 million by accident, you made wise decisions to get that money, and you need to make wise decisions to keep as much of it as possible.
2nd- Just because the IRS is telling you that you have to take a RMD, doesn't mean you have to pay taxes on it. With $4 million to work with, you have options. You may need to think outside the box a little bit on this, but it can be done. You can have your cake and eat it too!
The problem is obvious: $2.3 million IRA...
Have a question about finance?
- What percentage of my salary should I save in my 401k?
- I am 54 and have inherited $1,000,000. How many years can this sum last me?
- Is a 0% APR car loan too good to be true?
- I have $25,000 in credit card debt. I keep getting mail from Best Egg. Should I combine my credit card debt and get a loan from...
- How do I obtain a CPN number? Is it legal? If so, should it be used for a business or personal use?
Information is provided 'as is' and solely for informational purposes, not for investment purposes or advice. NerdWallet is not endorsed by or affiliated with FINRA. The helpfulness of an advisor's answer is not indicative of future advisor performance. NerdWallet does not endorse any particular financial advisor and cannot guarantee the quality, or reliability of any financial services provided by any of these financial advisors on the Ask An Advisor platform. Any financial information provided by an advisor and related to the provision of healthcare service is intended to promote broad consumer understanding and knowledge of third-party coverage for those services, and is not professional medical advice, diagnosis or treatment advice. Always seek the advice of your physician or other qualified healthcare provider with any questions you may have regarding a medical condition or treatment. NerdWallet does not recommend or endorse any specific physicians, products, procedures, tests, and reliance on any financial information related to healthcare coverage for products, procedures, and tests is solely at your own risk.
Disclaimer: NerdWallet strives to keep its information accurate and up to date. This information may be different than what you see when you visit a financial institution, service provider or specific product’s site. All financial products, shopping products and services are presented without warranty. Additionally, this site may be compensated through third party advertisers. However, the results of our financial services tools, blog content and reviews are based on objective analysis. For more information, please see our Advertiser Disclosure.