Ask Terry Questions IRA and 401k accounts related to RMD

IRA and 401k accounts related to RMD

By Terry Savage on August 19, 2014 | Financial Planning / Retirement

Between retirement at 66 and the RMD at 70.5, should I be takeing money out and placing it in different types of accounts to bypass the RMD with a forced withdraw?
Enjoyed you at GSU on Tuesday.
Thanks in advance, Al

Terry Says:  It all depends on when you want to pay your taxes!!  The government wants its money.  In the “olden days” we assumed we would be in a lower tax bracket on retirement — so it paid to wait until the required minimum withdrawal date.  That’s not so certain any more.   It depends on your income plans during retirement.  Withdrawing now just to beat the RMD just gives your  money a few less years to let it grow and compound tax-deferred.

One more thing, if you don’t really need the money, you can roll some of it to a ROTH IRA where it will continue to grow tax-free from the point of the rollover.  Of course, you will have to pay taxes NOW, instead of deferring them.  But the money in the ROTH does not have minimum distribution requirements.  So if you have saved enough you might want to pass that ROTH on to your namedbeneficiary (advising them not to take it out upon your death) but to keep it growing tax-free over their lifetime, as well!



a personal
finance question