Episode #30: How To Take Tax-Friendly RMDs


The Principle:

Required minimum distributions are a reality of retirement, but there are ways to take them in a tax-friendly manner. Brian explains.

(Click the featured times below to jump forward in the episode)

Honest Takes:

[00:16] – Searching For Tax-Friendly RMDs.  

  • Required Minimum Distributions (RMDs) are an inevitable fact of retirement. For those of you not familiar with RMDs, they are the minimum amount the government requires you to withdraw from your retirement accounts once you reach the age of 70 and 1/2. Basically, the government lets you grow your money tax-deferred for a time, but they eventually want their piece of your wealth. Once you take your RMD, the government can tax the money that’s withdrawn if it comes from a tax-deferred account like an IRA.

[00:36] – Ways To Make Your RMDs More Tax-Friendly.  

[2:40] – What Is A QCD? 

  • Let’s say your IRA is with Fidelity. When the time comes to take your RMD, write a check for that amount, and send it from Fidelity directly to your church or organization of preference. In turn, the government will count that donation as your RMD for the year. This is what’s called a qualified charitable distribution. In turn, you’ll also be given a tax deduction. You could save 30 percent in taxes, but you wouldn’t save that 30 percent had you simply donated from your checkbook.

[00:56] – Why Can’t You Just Give From Your Checkbook?

  • The new tax code raised the standard deduction limit. It’s now more than $24,000 if you’re married filing jointly. Basically, this means that your standard yearly donation would have to be greater than $24,000 to receive any type of tax deduction. A QCD lets you bypass that stipulation while using your RMDs to your advantage.

Today’s Truth:

Other Virtues:

The host: Brian Bowen – Contact

Subscribe To The “Retire With Integrity” Podcast: