Have you taken your Required Minimum Distribution yet?


Have you taken your Required Minimum Distribution yet?
If you are over 72 years old, the IRS tax code states that you must take your Required Minimum Distribution by December 31st. The penalty for NOT taking it is 50% of the shortfall.

Basically, if your R.M.D. was $5000 and you didn’t take it, the penalty is $2500. Had you taken say $1000 of the R.M.D., the penalty would be $2000 (half of the remaining).

This is by far one of the stiffest penalties in the tax code.
What happens when you really don’t need the money?

There are a few things you can do.

👉 Move the R.M.D. to your brokerage account and reinvest it there. This will still result in a taxable event meaning you will receive a 1099 for the amount taken. Most brokerage firms will withhold tax for you if you would like. If your state has an income tax this can be withheld as well.

👉 If you are still working, you can take the R.M.D. and move it to your ROTH IRA. You will still be taxed on it like the above way but now the money can be reinvested and, under current tax law, never be taxed again.

👉 You can give it away and PAY NO TAX. Yes, you read that right. Tax code allows you to send your R.M.D. directly to a qualified charitable organization known as a 501(c)(3). As long as the funds do not go to you, no taxes will be paid. The key is having the funds sent directly from the brokerage firm.

We love being able to teach clients how they can be generous givers, so of course we talk a lot about the last option. If you are a giver already, you can increase your personal cash flow by simply giving direct from your qualified account (IRA, 401-K, etc) and not your normal bank account.

Just make sure to get this handled before the end of the year, we would hate to see your money go to waste.

Still have questions? Click the link to schedule a call, we would love the opportunity to meet you.

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