Our CPAs at Modern Wealth Management often get questions about Required Minimum Distributions (RMDs). It’s a new thing for people. Once they turn 70½, they have to start taking money out of their tax-deferred accounts. Since it’s not something they’ve done before, there is a lot of uncertainty and confusion about RMDs.
Questions About Required Minimum Distributions
There’s a whole variety of questions that all revolve around that RMD such as:
- How much do I have to take?
- Should I give to charity?
- Should I take out Roth conversions?
- Can I take out more than the RMD?
- Do I have to wait until I’m 70½ to start taking my RMDs?
- Can I delay an RMD to after I’m 70½ and take two the next year?
Questions About Required Minimum Distributions Have Different Answers Based on Your Personal Situation
There are a lot more questions than those surrounding Required Minimum Distributions. A lot of those questions are fact-based1, and those are the easy ones. However, a lot of the questions about RMDs also depend on your personal situation like:
- When should you start taking your required minimum distribution?
- Does it make sense for you to do a Roth conversion?
These are the types of questions we enjoy addressing at Modern Wealth Management because they aren’t one-size-fits-all answers. It allows us to look at the plan and personalize your strategy to help you reach your goals in retirement.
Don’t Be Reactive – Be Proactive
This hits on something that people tend to do that’s typically reactionary. People tend to wait until the last minute, or the year they turn 70½, to ask questions about required minimum distributions. The reality is if you’re working with a competent financial planner, who is a Fiduciary, you should know the answer to your questions about required minimum distributions long before you turn 70½.
As a matter of fact, when we do financial planning work for someone in their 50s, we’re already planning for what that RMD plan is going to look like at 70½. That then dictates for us what kind of contribution you should be making to your 401(k). Is it all pre-tax, Roth, after-tax, or a combination of the three and why? Those answers help us plan for that distribution.
Get Help and Develop Your RMD Strategy
In conclusion, a lot of the questions about required minimum distributions our CPAs get are reactionary. That comes from a lack of a clear financial plan and lack of a distribution strategy. It’s ideal to start early. If you’re in the situation where you haven’t started and you’re approaching 70½, it’s not too late. You need to talk to someone to figure out your RMD strategy and how it fits into your overall financial plan. If you want to learn more about RMDs, check out our report Understanding Required Minimum Distributions (RMDs).
We have a team of CPAs and financial planners who work together to develop an RMD strategy specifically tailored to your plan. Our goal is to give you clarity, confidence, and control over your financial life in retirement. So, let’s chat! Give us a call at 913-393-1000 or fill out the form below to start your journey to and through retirement.
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Investment advisory services offered through Modern Wealth Management, Inc., an SEC Registered Investment Adviser.
The views expressed represent the opinion of Modern Wealth Management an SEC Registered Investment Advisor. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.