Required Minimum Distributions

Required minimum distributions, often referred to as RMDs or minimum required distributions, are amounts that the federal government requires you to withdraw annually from traditional IRAs and employer-sponsored retirement plans after you reach age 70½ (or, in some cases, after you retire). 

 

Which retirement Plans are subject to RMDs?

In addition to traditional IRAs, simplified employee pension (SEP) IRAs and SIMPLE IRAs are subject to the RMD rules. 

Why is RMD planning so important? 

  • RMDs trigger income taxed at ordinary tax rates
  • Incorrect RMD calculations and timing trigger massive penalties.
  • What do you do if you have multiple IRAs? 
  • What are strategies for deferring RMDs? 
  • What are the strategies for minimizing the negative impact of RMDs? 

 

 

 

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Why is required minimum distribution planning so important? 

RMDs can be one of the biggest retirement traps that retirees don't account for. In most cases the income generated by your Required Minimum Distributions are fully taxable. The can be like ticking time bombs! These create big problems for retirees, for example:

  • May trigger taxation on Social Security benefits. 
  • May force your income to be taxed at higher rates. 
  • May create ancillary tax planning issues. 

Also, if you fail to take at least the RMD for any year (or if you take it too late), you will be subject to a federal penalty. The penalty is a 50 percent excise tax on the amount by which the RMD exceeds the distributions actually made to you during the taxable year.

Whether you are an IRA owner or a beneficiary of an IRA, we can help you calculate your RMDs.

 

INterested in advanced RMD Planning strategies?

Maximizing retirement income means creating a plan for Required Minimum Distributions. The sooner you create a plan, the better off you are. We create strategies that help you manage your IRAs before RMDs become a problem. These strategies save our clients thousands over the life their retirement plans. 

We offer free consultations and we will show you how our strategies regarding RMDs will postiively impact your retirement income plan. Schedule your free consultation today.