My wife and I are both retired. I am taking my RMD dollars as required. We have excess dollars as our home is paid for and no major debt except for a home equity loan that we pay 3% on. If we reinvest the RMD dollars we can are going to end up paying taxes on it (a second time – once when take as RMD and once if cash in). Any suggestions on where to put the extra RMD dollars?
Terry Says: Haha — welcome to a growing club — retirees forced to take withdrawals from retirement plans when they would rather let the money keep growing tax-deferred! But the government wants its taxes, so you must withdraw. You get a couple of choices: spend it (enjoy it), reinvest it (sure you’ll pay taxes on any future gains, but at least they can be capital gains taxes at lower rates!), or gift it to grandchildren (into a 529 account where it will grow tax-free for college) or to a charity (where you’ll get a tax deduction). It’s not the worst problem to have!