What To Do About RMDs and Tax Strategies

The Principle:

Have more money than you need as it pertains to RMDs? It’s a good problem to have, but whether you decide to reinvest, spend, or give your money away, make sure you have a proper tax strategy in place.

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Honest Takes:

[00:43] -What Do You Do if You Don’t Need The Money From Your RMDs?

  • A lot of our clients reinvest their required minimum distributions. They change it over to a investment brokerage account and invest the difference once they’ve paid the tax. Some will give it away, but with the new tax laws there are not many deductions so you don’t have to itemize. Make sure you choose a tax-friendly option for your RMDs.

[3:55] – In Retirement, Be Sure to Consider the Tax Implications.

  • There are some options about your taxes, so be sure to check with your financial advisor. Whether it’s charitable donations or business income, figure out what you can do about your taxes to reduce it.

[8:33] – How Important Is It to Have a Good Tax Strategy in Place before You Withdraw Any of Your Retirement Money?

  • In your 60s you might want to start taking withdrawals while you’re young and healthy. But if you’ve only saved in a 401(k), then you’ll probably have to take out about $90,000 to then live on $70,000 because you’ll be paying the taxes. Most of the time you are in a higher tax bracket in retirement. A million dollars in your 401(k) looks good, but after taxes you might lose $300,000 or more of that. If you’re young enough now to switch to plans like a Roth that will allow you to take your money out tax-free later.

Today’s Truth:


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The Host:

Brian Bowen – Contact