If you have a pre-tax retirement account, you will ultimately need to get the minimum distribution (RMD) you need. RMDs must start at a certain age (currently 73 or 75 years old, 75 or 75, depending on your birth year) and continue annually until your account is exhausted or die.
At what age do you take RMD?
All communities have changed their eligibility age to take RMD due to the Secure Act 2.0 setting. According to Thrivent, the new ages are as follows: If born before 721950, if born between 1951 and 195975 before 73, and if born before 1951 and 195975, then 1960 or after, you can take a voluntary distribution at age 59 1/2.
How is RMD taxed?
Your RMD is taxed as normal income in the year you take them. If you have low income, this may not be a problem. However, if you already have high income taxes or fears, there are some opportunities to eliminate or postpone your tax liability if you are pushed to something higher.
Shrink your money for RMD
You can reduce the money in your tax deferred account before using RMD. This can be done by converting tax deferred dollars into losses. You have to be at least 59 1/2 and have lost at least five years. But once you roll into Loss, you can grow tax-free. According to the IRS, you should not do this by 1/2 of the age of 59.
Of course, you will need to pay 20% tax when withdrawing from your tax deferred account. However, it has not grown in taxable accounts. Instead, grow with tax-free accounts that don’t require RMD.
Postponing RMD while working
If you are still working over the age of 72 and do not own more than 5% of the company you work for, you can delay taking RMD. This applies only to current employer’s 401(k) or 401(b) plans. Even if you have a previous employer plan or a traditional IRA, you will still need to get an RMD.
Young spouse rules
When calculating RMD, divide your year-end account balances by IRS life expectancy factor from the previous year. This can be found in IRS Publication 590-B. This is based on this year’s birthday. You need to calculate the RMD for each account you own. You must obtain each RMD individually.
Most original account owners use standard RMD calculations. However, if you are the original owner with a young spouse and they are the only beneficiary, you can trim your RMD.
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Qualified Charitable Distribution
Consider a qualified Charitable Distribution (QCD). According to the IRS, the QCD rule allows IRA owners over 1/2 years old to transfer directly to charities up to $100,000. Can be counted as all or part of the RMD.
This is wise if you are planning to give to a charity and take the standard deduction rather than itemizing deductions that include charitable contributions.
But the money must go directly to the charity. It won’t go to you, go to charity, or count as QCD. You will be taxed.
Transfer the stock to an intermediary account
RMD does not have to be cash. IRA custodian transfer stocks can be sent to taxable accounts. For example, you could transfer $5,000 worth of shares to meet $5,000 RMD. Just make sure the amounts match. The transfer date serves as the cost basis for the stock in the taxable account. One of the benefits of doing this is that if the investment falls in value during the tax account, you can harvest tax losses.
Plans to manage RMD taxes
There are several ways to minimize the tax burden on RMDs, but planning requires several. For example, we recommend starting your plans in the early 60s. Consider discussing RMD with a qualified tax advisor or wealth manager.
Epoch Times Copyright©2025. The views and opinions expressed are those of the author. They are for general informational purposes only and should not be interpreted or interpreted as recommendations or solicitations. Epoch Times does not provide investments, taxes, legal, financial planning, real estate planning, or other personal financial advice. Epoch Times is not responsible for the accuracy or timeliness of the information provided.
