Maximizing Your RMD: Key Issues to Consider
If you're reviewing your Required Minimum Distribution (RMD) from a qualified retirement account, there are several issues you should consider in order to make the most of your funds and meet your financial goals.
First, if your RMD is more than you need for living expenses, consider transferring the excess to a non-qualified account for re-investment rather than leaving it in cash. You should also verify that any other retirement accounts subject to RMDs will be satisfied, and consider the impact of market conditions on the value of your qualified account. If the value is significantly up or down, you may want to accelerate or spread out your withdrawals in order to lock in gains or avoid selling assets at lower share prices.
If you've inherited a qualified account, be aware of the unique RMD rules that may apply due to the SECURE Act, such as the 10-year rule which requires non-eligible designated beneficiaries to withdraw the entire balance of the account within 10 years of the account owner's death. You should also consider whether you're eligible for any exceptions, such as if you're still working and contributing to an employer-sponsored account or if this is your first year subject to an RMD.
It's also important to review your tax withholding to ensure that it's accurate, and consider making a Qualified Charitable Deduction (QCD) if you're required to take a RMD and planning to donate to charity this tax year. QCDs can be a tax-efficient way to donate, but be mindful of the requirements, such as limits and the requirement that the recipient be a qualified charity.
By considering these issues when reviewing your RMD, you can make the most of your funds and meet your financial goals.
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