Glenda Moehlenpah photo with Financial Bridges logo

Glenda Moehlenpah CPA, CFP®

 

Financial Bridges

12975 Brookprinter Place, Suite 140, Poway, CA 92064

 

Phone: 858-486-0100

 

Email: glenda@financialbridges.com

Website: www.FinancialBridges.com

January/February 2020

Tax-Smart Retirement Distributions

Tax-Smart Retirement Distributions

Before you retire, consider planning for your required minimum distributions (RMDs). This can be more complicated than you imagine if you have significant retirement assets in qualified plans, such as 401(k) accounts and IRAs, but you can achieve a tax-friendly result with a little planning.


Know the Rules
Generally, you must begin taking RMDs by April 1 of the year after you reach age 70 ½ and by December 31 of each subsequent year. Your tax professional can help you determine your RMD amount, which typically is calculated by dividing the balance subject to RMDs by your life expectancy.


Different rules apply if your spouse is the sole beneficiary and at least 10 years younger than you. There are stiff tax penalties that apply on RMD amounts not taken.


Easing the Bite
Use the years before age 70 ½ to help ease the potential size and subsequent tax bite on eventual RMDs. For example, consider converting some traditional IRA assets to a tax-free Roth IRA during lower-income years, to limit the future income tax bite (you’ll pay ordinary income tax upon conversion). Or invest some IRA money in a Qualified Longevity Annuity Contract (QLAC), which can delay required payments for several more years.


Deducting up to 60% of your adjusted income annually for charitable contributions can also help reduce the tax bite.


SUBSCRIBE

Enter your Name and Email address to get
the newsletter delivered to your inbox.

Please include name of person that directed you to my online newsletter so I can thank them personally.


CONTACT US

Enter your Name, Email Address and a short message. We'll respond to you as soon as possible.

Financial Bridges and LTM Marketing Specialists LLC are unrelated companies. This publication was prepared for the publication’s provider by LTM Client Marketing, an unrelated third party. Articles are not written or produced by the named representative.

The information and opinions contained in this web site are obtained from sources believed to be reliable, but their accuracy cannot be guaranteed. The publishers assume no responsibility for errors and omissions or for any damages resulting from the use of the published information. This web site is published with the understanding that it does not render legal, accounting, financial, or other professional advice. Whole or partial reproduction of this web site is forbidden without the written permission of the publisher.