"The IRS requires that you take the proper amount from RMD-subject accounts by year-end, but the rules don't specify which investments you tap to meet those distributions.... [A]ssuming you don't need the RMD for living expenses, a transfer in-kind of securities from your IRA to a taxable brokerage account may make sense. Not only can it help you maintain the same market exposure, just in a different part of your portfolio, but the transfer may also reduce the taxes due on future appreciation when you eventually do sell." MORE >>
"[T]he key point is that the INDB Strategy can potentially extend the distribution period by up to 50%, giving heirs more time and flexibility in managing cash flow and taxes. And because the strategy's success depends on understanding the IRS timing and rule constraints, financial advisors can play a critical role in both determining when it's appropriate and helping clients implement it effectively!" MORE >>
"The fact that some of the people are not related to John does not disqualify them from being an EDB. Yes, the 'random guy on the train' would be an EDB on John's IRA simply because he is not more than 10 years younger than John. Being older qualifies. That's why John's father and his mailman are also EDBs." MORE >>
"SECURE limited the ability of some inherited IRA beneficiaries to stretch their distributions from the IRA. Non-eligible designated beneficiaries and non-designated beneficiaries are restricted in their ability to stretch distributions beyond 10 years. Eligible designated beneficiaries, such as spouses, are still able to do the inherited stretch." MORE >>
"[T]here is often a misconception that a converted RMD is a missed RMD. This is not the case. The RMD was taken from the traditional IRA, so no 25% penalty for missing the RMD would apply. Instead, a converted RMD is technically an excess contribution in the Roth IRA, so we follow the excess contribution correction rules." MORE >>
"[U]nder the old rules, a trust with a mix of Eligible and Non-Eligible Designated Beneficiaries would have been automatically subject to the 10-Year Rule for Non-Eligible Designated Beneficiaries. Under the new rule, if the trust is divided into separate subtrusts for each beneficiary, the Eligible Designated Beneficiaries can each receive 'stretch' distributions over their own life expectancy -- while only the Non-Eligible Designated Beneficiaries will be subject to the 10-Year Rule. Notably, the IRS regulations only allow this 'separate accounting' treatment when the trust document includes a provision to divide the trust into separate subtrusts before the account owner's death." MORE >>
"Your RMD is effectively cooked as of the year-end of the previous year. So, the RMDs that people are taking out for 2025 depend on whatever their balance was at the end of 2024. Of course, balances were elevated, so RMDs are a little high for 2025. If the market stays down for 2025, then people will see that reflected in the amounts that they have to take out for 2026. There's a little bit of a lag effect. There's not as much opportunity to add some art to when you take out your RMDs, as you might hope." MORE >>
"The SECURE 2.0 Act eliminated required minimum distributions (RMDs) for Roth 401(k)s.... That ability to continue to save tax free makes Roths considerably more valuable.... One argument for changing the RMD rules appears to have been to make the treatment of Roth 401(k)s consistent with the treatment of Roth IRAs, which have never been subject to RMDs. Consistency is a good goal. Congress simply flipped the wrong way." MORE >>
"Participants who turned 73 in 2024 must begin taking RMDs from their employer-sponsored retirement plans by April 1, 2025, unless they are still working, and their plan allows them to defer. Missing this deadline can be costly ... Plan administrators play a crucial role in promoting compliance and protecting participants from these penalties." MORE >>
65 presentation slides. Topics: [1] Background on required minimum distributions (RMDs) and IRA data; [2] Incidence of distributions during years with RMD rule changes; [3] Percentage of those taking distributions in 2019 who did or did not take them in 2020, Age and account balance; [4] Distribution amounts: Average distribution rates, Percentage with distributions more than the RMD; [5] Roth distributions. MORE >>
"If a client is at least 59.5 and five years have passed since their last contribution, all Roth IRA distributions become tax-free, including the earnings. While a typical Roth IRA is not subject to minimum distribution rules, inherited Roth IRAs are subject to the same RMD rules as traditional IRAs. When a surviving spouse is at least 59.5, the spousal rollover option is likely advantageous." MORE >>
"Required minimum distributions (RMDs) are payments typically made by year end. However, individuals who turned 73 in 2024 can delay their first RMD until April 1, 2025. This special rule applies to IRA owners and participants born after Dec. 31, 1950.... Taxpayers receiving their first required distribution for 2024 in 2025 (by April 1) must take their second RMD for 2025 by Dec. 31, 2025." MORE >>
53 pages; Mar. 10, 2025. "What's New: Distributions to victims of domestic abuse.... Distributions for emergency personal expenses.... Transfers and rollovers of assets and the substantially equal payment method.... Reminders: [1] The direct payment requirement for certain distributions for payment of health or long-term care insurance repealed.... [2] Form 8915-F replaces Form 8915-E. "MORE >>
53 pages; Mar. 10, 2025. "What's New: Distributions to victims of domestic abuse.... Distributions for emergency personal expenses.... Transfers and rollovers of assets and the substantially equal payment method.... Reminders: [1] The direct payment requirement for certain distributions for payment of health or long-term care insurance repealed.... [2] Form 8915-F replaces Form 8915-E. "MORE >>
"This post describes tax-related retirement plan decisions and tax impacts during working years, financial gap years (age 59½ to required minimum distribution (RMD) age), and after RMDs begin. Since RMDs are taxed as ordinary income, strategies to mitigate their tax impact are also described as well as related topics such as portfolio rebalancing, rollovers, and account withdrawal methods (e.g., Rule of 55 and the 72(t) rule). Also included is a summary of research about RMDs, which are often used as a de facto retirement savings income withdrawal strategy by older adults, and the impact of asset allocation on the volatility of RMDs. It concludes with three 'need to know' facts, and six take-away action steps." MORE >>
"Prior to the end of the Biden administration, a number of proposed and final regulations were issued that impact retirement and welfare benefit plans. The final regulations are effective in 2025, and the proposed regulations, if finalized, would be effective in 2026.... [1] New relief on ACA employer mandate penalties.... [2] IRS anticipates a delay in applicability date for future SECURE 2.0 required minimum distribution regulations.... [3] IRS proposes regulations on SECURE 2.0 Act catch-up provisions." MORE >>
"[1] Waiting until the 11th hour to contribute to an IRA ... [2] Assuming Roth IRA contributions are always best ... [3] Making a nondeductible IRA contribution for the long haul ... [4] Not contributing to an IRA later in life ... [5] Forgetting about spousal IRA contributions ... [6] Running afoul of the Roth IRA five-year rule ... [7] Triggering a tax bill on an IRA rollover ... [8] Not being strategic about RMDs from a traditional IRA ... [9] Not paying enough attention to IRA beneficiary designations." MORE >>
"[T]rusts that include minor children or disabled beneficiaries can significantly benefit from the life expectancy payout option. By structuring these trusts correctly, planners can ensure that distributions are calculated based on the life expectancy of the oldest trust beneficiary, thereby potentially extending the tax-deferral period for younger beneficiaries.... [P]lanners should consider strategies that utilize the benefits of Roth conversions, which can offer tax-free growth and no required minimum distributions during the account holder's lifetime." MORE >>
"The earliest potential effective date for certain proposed required minimum distribution rules could be further delayed beyond the 2026 distribution calendar year." MORE >>
"The delay in the effective date applies to the following provisions: [1] Surviving spouse treated as participant.... [2] Payments to beneficiary of surviving spouse.... [3] RMDs for participants with pretax and Roth accounts.... [4] Corrective distributions that reduce excise tax.... [5] Impact of divorce on qualified longevity annuity contracts (QLACs).... The effective date remains Jan. 1, 2025, for proposed provisions relating to see-through trusts and updates to the life expectancy and uniform lifetime tables." MORE >>
"As a surviving spouse, you have more flexibility with an inherited 401(k) than other beneficiaries. This flexibility allows you to choose options that best suit your financial needs and long-term goals. The key is understanding the rules and making informed decisions based on your circumstances, including your age, tax situation, and income needs." MORE >>
"This relief gives plan/IRA sponsors and recordkeepers some much-needed time to finalize the implementation of these changes. Importantly, prior to such date, the IRS provides a reasonable, good faith interpretation standard to meet these new rules." MORE >>
"When is the first RMD due (the Required Beginning Date -- RBD)? ... What is the deadline for withdrawing subsequent RMDs after the first RMD? ... Does withdrawing more than the required minimum distribution reduce the minimum for the next year? ... Are there plan distributions that do not count as RMDs? ... RMDs must be taken prior to a rollover or roth conversion ... Penalties for failure to take sufficient RMDs ... Who is responsible?" MORE >>
"If you inherited an IRA, that windfall may cost you money if you aren’t careful. That’s because there are rules around inherited IRAs to ensure the money in the account is eventually taxed and the IRS gets paid. Run afoul of any of them and you may create a costly tax event, plus you can be hit with fees and penalties." MORE >>
