Episode 144: Understanding the Rules of RMDs

Retire With Style

In this episode of 'Retire with Style', Alex and Wade delve into the intricacies of Required Minimum Distributions (RMDs). They discuss the calculations involved, the implications of RMDs on retirement planning, and the recent changes introduced by Secure Act 2.0. The conversation also covers the consequences of failing to take RMDs, the aggregation of RMDs across different accounts, and provides examples of RMD calculations using life expectancy tables. Additionally, they touch on the topic of RMDs for inherited accounts and introduce the concept of Qualified Charitable Distributions as a strategy to manage RMDs effectively. Listen Now to Learn More!

Takeaways

• RMDs are required to ensure taxes are paid on tax-deferred accounts.
• The starting age for RMDs has changed to 73 or 75 depending on birth year.
• RMDs do not apply to Roth IRAs or Roth 401(k)s.
• Failing to take RMDs can result in significant penalties.
• You can aggregate RMDs across multiple IRAs but not 401(k)s.
• RMD calculations are based on the account value at the end of the previous year.
• The uniform life table is commonly used for RMD calculations.
• Qualified Charitable Distributions can help manage RMD tax implications.
• Understanding RMDs is crucial for effective retirement planning.
• RMDs can impact social security taxation and Medicare premiums.

Chapters

00:00 Introduction to Required Minimum Distributions
03:00 Understanding RMD Calculations and Implications
06:04 RMD Rules and Changes in Secure Act 2.0
09:10 Consequences of Not Taking RMDs
11:59 Aggregating RMDs Across Accounts
14:53 RMD Calculation Examples and Life Expectancy Tables
21:04 Exploring RMDs on Inherited Accounts
25:54 Qualified Charitable Distributions and Future Topics

Links

The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/

This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”