Are you compliant with your required minimum distribution? If you turn 73 or are older, you need to take an RMD from your IRA by the end of this year. It’s calculated based on an IRS table (see Fidelity’s below)—a divisor, divided into last year’s yearend balance. That’s a lot of acronyms. Is it any wonder investors get frustrated?
Your Survival Guy doesn’t like frustration. It’s a terrible feeling. I also don’t like the prediction business. I don’t like uncertainty. It’s why I advise investors to pick a time of year to satisfy their RMD and stick with it. Many of you who I’ve had conversations with this week, have chosen to take it in January every year. It’s like dollar cost averaging, you just take it at the same time every year and forget it.
The proceeds from your RMD, once the IRS gets its take, can be moved to a brokerage account or sent to your bank for this year’s spending needs.
You can also move shares in-kind (without selling) as long as the IRS gets its take. You can also do a QCD, donating it to your favorite charities.
And it doesn’t need to be January.
You can take the RMD in monthly or quarterly payments to spread it out—another form of dollar cost averaging—not timing the market.
What you don’t want to do is forget to take it. The IRS levies a hefty penalty for non-compliance.
Action Line: Unfortunately, life doesn’t get less complicated as we get older. It can’t hurt to have another set of eyes on your money to help. And if you don’t get help now, imagine the names your spouse will think up for you when dealing with the rat’s nest when you’re gone. Email me at ejsmith@yoursurvivalguy.com to set up a consultation. But only if you’re serious.
Click here to view the Uniform Lifetime Table from Fidelity.
Originally posted on Your Survival Guy.
