Ask Terry Questions 457 RMD’s

457 RMD’s

By Terry Savage on June 17, 2015 | Financial Planning / Retirement

Is it better to take a lump sum RMD or take a monthly check? I will be 70 years old in October and will need to make a decision by April 1st.

Terry Says:   Well, that depends on how you like the money coming in. If you get it all in one lump sum can you “budget” to spend it throughout the year?   Or will it be too tempting?  Or do you like having a hunk of money sitting in your money market fund for emergencies?  It’s up to you.

Remember, you don’t have to take the first RMD until the year after you reach age 70-1/2.  Work with your RMD custodian to determine when that full distribution must be completed in order to comply with that regulation.  Or, perhaps at this age, depending on the 457 plan, you might be better off ROLLING OVER the entire amount DIRECTLY to an IRA rollover at a place like Fidelity or Vanguard, where they can advise you how to invest the balance more conservatively than the likely options in your 457 plan — AND they can handle the RMDs more easily for you.  But work with your 457 plan to accomplish this directly, so you aren’t liable for taxes on anything other than the RMDs.

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