financial planning

RMD at 73: What’s Up with That? 

We have noticed that the rules about IRA account withdrawals can cause some confusion, particularly among those who are getting close to the “Required Minimum Distribution” age.  

Here, we’d like to cover what the basics might mean for most people, though it is not intended to be advice or a recommendation for your specific situation. 

For traditional or rollover IRA account owners, withdrawals after age 59½ are free of penalty, but income taxes must be paid on the amounts withdrawn. One may withdraw money or not, in accordance with their needs and plans. 

But beginning at age 73, the rules change. 

For each year beginning with the year you turn 73, a “Required Minimum Distribution” (RMD) must be withdrawn: 

  • “Required” means there is no option about it—it must be done. There’s a pretty hefty penalty tax for missing it. 
  • “Minimum” means that you must withdraw at least the calculated amount, though you may withdraw more if you choose. 
  • “Distribution” is simply the word the IRS uses for withdrawals. 

The way the numbers work, the first RMD for age 73 is around 4% of the prior year-end account balance. Then, the RMD rises gradually each year. The RMD is around 5% at age 80 and around 10% by age 92.  

The withdrawals will be taxable—that is the whole object of the exercise, from the IRS’s perspective.  

Even with those requirements, IRA accounts may still have significant balances until advanced ages. 

Here are just a few fine points:  

  • The factor used to calculate the amount comes from an IRS table, and we can help check the arithmetic for you. 
  • The withdrawal may be taken any time in the calendar year. 
  • If you have multiple IRA accounts, it can get confusing. Some people consolidate and simplify their finances at this point. 

For more information, the IRS explains more details about RMDs online, available here. Please also keep in mind that different rules apply to inherited IRAs, Roth IRAs, and certain other situations, so do seek specific advice for your situation as necessary. 

And our role? We aim to help each client figure out how your money might do what you need it to do.  

So the question of how you should manage your accounts and your withdrawal strategy is best answered in a one-on-one discussion. If you would like our help talking through your situation, please call or email us. Happy to help.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor. 

Want content like this in your inbox each week? Leave your email here.

Play the audio version of this post below:

RMD at Age 73! – 228Main.com Presents: The Best of Leibman Financial Services

This text is available at https://222Main.com/.

The Meaning of “Client-Centered

What does it mean for our business to be “client-centered”? (Wait, shouldn’t all business be “client-centered”?…) In this week’s video, Mark and Caitie talk about the role the firm plays in our relationships with you, what the client’s job is, and more.

Want content like this in your inbox each week? Leave your email here.

It Starts with Listening

Listening to one another is a gift that costs nothing but means everything. We know that our time and attention are precious resources, which is why our team here at 228 Main always has our “listening ears” on. 🙏

Want content like this in your inbox each week? Leave your email here.

When Buying “The Stock Market” May Not Be Optimal 

When people talk about “the stock market,” they might actually be thinking of the Dow Jones Industrial Average, or the S&P 500 Index. These lists are what they sound like: averages and indexes of exchange-traded securities.

And one popular school of investing calls for buying index “funds,” collections that offer a slice of what’s happening on one of those lists. The goal is to capture the list’s average return. It’s simple, easy, and relatively inexpensive to seek to replicate those market averages.

But there’s a tradeoff. There have been extended periods when those averages basically went nowhere for many years at a time. The “average” approach means you are by definition going with the crowd. But crowds can become herds, which can turn into stampedes.

This is what happened with the raging Nifty Fifty and again in the Tech Wreck.

Back in 1973, the “Nifty Fifty” stocks were all the rage. Many scrambled to buy and hold these dominating stocks, names like IBM, Xerox, or Coca Cola. One might say there was a stampede into the favored names. Valuations got stretched, the S&P 500 peaked—and proceeded to fall about 50%.

It took until 1982 to regain that 1973 peak, before moving any higher: a decade with essentially no progress.

It happened again from March 2000 to 2013, a time that got the nickname the “Lost Decade.” This time, the mania was internet stocks. Technology and communications companies dominated the S&P 500, and investors got excited. Again, more people stampeded in, valuations got stretched, the S&P 500 peaked—and proceeded to fall about 50%. Not until 2013 did the index begin to make and hold new, higher ground.

So what was problematic about those peaks? The largest companies became a much larger fraction of the total value of the S&P 500. The top companies in 1973 and 2000 had become worth many times the bottom companies combined.

Staying with the crowd—buying indexes and aiming to capture averages—is not the only way to invest. In those episodes from history, some other sectors fared better than the fallen favorites and broad U.S. market averages. There were those smaller companies, value-style investments, and overseas markets that generally went up during the Lost Decade.

At 228 Main, our core investing principles include “avoid the stampede” and “seek the best bargains.” As such, while the largest companies in the S&P 500 are becoming increasingly concentrated at the top—reminiscent of 1973 and 2000—valuations may be getting stretched once again. We are seeking to have more and more of our portfolios invested other places. (Research is a core activity here, a daily discipline, and we invest a lot of time and energy into it.)

That is to say, we’re seeking opportunities outside the averages. We’ve got our eye on value-style companies—those that seem to provide a lot of current profits, or cash flow, or dividends relative to each dollar invested. We’re seeking companies operating in faster-growing economies, the ones that provide food, shelter, transportation, communications, or energy (and are trading at more attractive prices). We want to know what’s happening with smaller companies, the opportunities that don’t fit the profile of those mega-sized names that dominate the market averages today.

There are tradeoffs involved with either approach.

  • When we follow the averages, we risk following the crowd straight into a stampede.
  • When we buy the bargains, our particular favorites may get cheaper while the darlings of the market are still climbing higher. Our portfolio performance could generally lag a red-hot market.

To be clear, we are still invested in those large U.S. growth companies we’ve mentioned. But, clients, we’re more diversified now than we’ve been at any time since the early 2000s. Even though we may be on the right track for long-term investors, it can be lonely to be contrarian. So it’s times like these that it helps to check in, take the long view, and make sure the methods suit the goals.

And for us, it’s the pursuit of capturing the potential growth, for the long run. No guarantees, but that’s what we’re working toward.

Clients, please call or email us if you would like to talk about this or anything else.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. All investing involves risk including loss of principal. No strategy assures success or protects against loss.

Want content like this in your inbox each week? Leave your email here.

Play the audio version of this post below:

When Buying “The Stock Market” May Not Be Optimal – 228Main.com Presents: The Best of Leibman Financial Services

This text can be found at https://www.228Main.com/.

Money Grows (But Not on Trees) 
photo shows a green tree along a country lane, surrounded by green fields

Over the past few years, more of us have found the joy of raising backyard chickens or container gardens or fruit trees. It’s an opportunity to see the fruits of our labor—literally!—grow.

It may take a few years for a new apple tree to produce. But with care and attention, that same tree may over time provide bushels of fruit for you, your family, or your community.

Growing your wealth isn’t that much different.

For example, if you put $10,000 into a savings vehicle that paid 2% annual interest, how long would it take you to double your money? The intuitive answer would be 50 years: 50 x 2% equals 100% return.

But due to the effects of compound interest, you’d actually get there in 36 years—not 50.

You don’t just get interest on the money you originally put in: you’d be getting interest on the interest you’ve already earned, too.

Doubling your money in 36 years is not terribly impressive. But then, 2% is not a terribly impressive rate of return. At 4%, as you might expect, you can double in half the time: a mere 18 years. So in 36 years, you’ll have doubled twice, quadrupling your original money. In 54 years, it would be eight times what it originally was!

That may sound like a long time, but if a person started saving in their 20s, they could reasonably expect to have 50+ years for their earliest savings to compound.

And that’s at a relatively conservative 4% annual return. As your rate of return increases, your compounded returns increase exponentially. At 5%, your money would increase tenfold in 50 years. At 6.5%, your money would increase twentyfold in the same time: a mere 1.5% increase in returns doubles the money over 50 years!

All of this to say, it doesn’t take very many doublings to turn modest savings into a sizeable pile of money.

Of course, sometimes this is easier said than done. Just as some growing seasons are rougher than others, returns are never guaranteed, and pursuing higher returns generally means accepting more volatility and risk.

Potential growth takes preparation, patience, and a little guidance along the way. Even modest investments can multiply. We’re here to keep an eye on the math together. Don’t worry: no quizzes.

If you’d like help planning, planting, or tending your financial orchard, we’re here to work alongside you as it tries to grow.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Investing involves risk including loss of principal.

This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing.

Want content like this in your inbox each week? Leave your email here.

Play the audio version of this post below:

Money Grows (But Not on Trees) – 228Main.com Presents: The Best of Leibman Financial Services

This text is available at https://www.228Main.com/.

Your Money Never Retires 

For many people we know, money represents work. It’s the sweat and the time and everything else that goes into one’s livelihood.

It may have started decades ago, perhaps with a job for a local farmer, walking beans or baling hay. (Does that reference date us?) It’s all the jobs that followed, too. No matter where those paychecks came from, the work behind them can become a source of pride—one that can also fund our retirement years.

We’re fortunate to know many people who end their careers with resources beyond their needs. It’s a nice problem to have: what happens when the excess outlives us? What’s the next “life” for what you’ve earned and accumulated?

We’ve been hearing from some of you about these big financial legacy questions, and there are many possible answers. In no particular order, here are a few ideas that you have been sharing with us.

Spend it on shared memories. For many, the pace of retirement includes more travel and experiences that weren’t possible during the working years. And while you’re at it, you might think about including those closest to you. Some might take their children or grandchildren with them on the big adventures. If you don’t want to leave behind wealth well beyond your beneficiaries’ needs, spend well now, with them: create the memories while you have the opportunity to do so. Bonus? They have another shared memory to enjoy, long after the experience is over.

Consider making gifts where they would make a difference now. There’s no rule saying you have to wait until you’re gone to get the excess to your beneficiaries. An inheritance can be life-changing, but who’s to say that a well-timed gift couldn’t make a big impact? It could be that splashing around a little cash now might make more difference in the long run. Maybe a loved is working toward a down payment on their first house, or some seed funding for their business expansion, or some other worthwhile project that you’d like to support. Why not now?

Direct it to the causes you care about. You can turn some of your charitable intentions into plans now, too. Your legacy planning may already involve leaving behind some assets to charity, and there are other strategies that might fit your goals. For example, a Donor Advised Fund (DAF) can be set up to benefit organizations of your choice after you’re gone, but it can also be left to a successor: a person you trust to direct charitable distributions of your gifts. They could carry on the work you start now.

Making these kinds of choices truly is a great problem to have. Generational wealth is a powerful tool and privilege. It also highlights the tensions we feel around money: what is the utility of money in our lives—and beyond? We don’t have to know all the answers, but there might be a chance to unlock some exciting opportunities for the generations ahead, if only we get a little more intentional or organized now.

Clients, may your wealth bring you only the best of dilemmas. We’ll be here to try to help you along your way.

Want content like this in your inbox each week? Leave your email here.

Play the audio version of this post below:

Your Money Never Retires – 228Main.com Presents: The Best of Leibman Financial Services

This text is available at https://www.228Main.com/.

THREE LITTLE WORDS YOU MAY NEED TO KNOW: Required. Minimum. Distribution.  

If you are of a certain age and have certain retirement accounts, you probably need to know about the annually required withdrawals from those accounts. The IRS calls them “Required Minimum Distributions”—RMDs.

One special note: Clients, many of you are already treating your retirement account like an orchard, taking out the fruit crop each year to live on. The RMD is not an “extra” amount on top of the crop: it is just a minimum. If you are already taking out 5% in monthly payments to fund your retirement, you don’t need to worry about what happens at age 73.

We’ll talk about the details here, then how it works out in practice.

People born in or before 1950 with any form of retirement account (other than Roth IRA) have already begun doing this RMD process each year (or should have). People born in 1951 or later will have to begin by the year they turn 73.

Basically, the RMD needs to be calculated for each retirement account you have (except Roth IRAs). You must take out the total amount required by December 31, and you will receive a 1099-R showing taxable income.

Clients, you know we pay attention to this and strive to keep you informed about what needs to be done. But there’s one thing to be careful of: take this as an opportunity to check whether there is some account somewhere that we don’t know about, like a 401(k) from a former employer, an odd IRA balance somewhere, 457 or 403(b) plans, and so on. It happens, but it would be a pain to get yourself into some trouble over an account that’s been out of sight, out of mind.

Some people may choose to use the onset of RMDs as a time to consolidate all of their retirement funds into a single rollover IRA, to make this process simpler going forward.

One of the advantages of Roth IRAs is that they have no RMD requirement. As a matter of good planning, it may make sense to convert partial IRA balances to Roth, pay tax when you choose, and whittle down that balance that is subject to RMDs in traditional retirement accounts.

There are lots of ways to handle things! If you’d like to talk about it, we’re here for it. Email us or call.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.

Want content like this in your inbox each week? Leave your email here.

Spend Well, for Impact 

The object of our work can be distilled into four words: Invest wisely, spend well.

You’ll notice that half those words have nothing to do with saving more, investing more, or putting off pleasure today in order to have more wealth tomorrow. They are a call to action for the present moment: spend well.

But who gets to do the spending? And for whose benefit?

(To put it more bluntly, as one of you has told us before, “I’m not living my life to make my kids rich.”)

We each have to decide what it means to spend well. Our spending habits have a chance to make an impression on the next generation. In fact, what we give away today might inspire even more generous habits in our offspring, or our neighbors, or our students.

It can be downright fun to spend today rather than waiting to leave our mark. Bequeathments, retirement gifts, and other forms of legacy planning can be fitting vehicles for our generosity, but for some people, it might also be prudent to consider what it is we’re waiting for.

If “enough is as good as a feast”—another gem one of you taught us!—then the excess might be spent in a specific direction, today.

A Donor Advised Fund (DAF) is one vehicle for committing to a charitable intent, whether or not the exact destination of the gift is known right now. Spending well might actually mean investing for someone else’s long haul: an organization or cause near and dear to us, a community effort that’s bigger than what any one of us could achieve alone.

This is what we do at 228 Main: help connect the resources we manage to their sources of meaning. We’re not accumulating wealth for the sake of having it. It’s what those resources might mean, what they might do.

But if you can “invest wisely,” you may end up with even more to “spend well”—both now and in the future. No guarantees, but this is what we strive toward: Invest wisely, spend well.

Clients, if you would like to talk about this or anything else, email us or call.

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss. Past performance is not a guarantee of future results.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

Want content like this in your inbox each week? Leave your email here.

Play the audio version of this post below:

Spend Well, for Impact – 228Main.com Presents: The Best of Leibman Financial Services

This text is available at https://www.228Main.com/.

What If Your Legacy Started Today?

Clients, the wealth you bring to the shop is meant for the long haul.

We often say that the grocery money doesn’t live in here. The car breaks down or the washing machine gives out? You don’t call us for that. Long-term money lives in long-term investments, aimed at long-term goals—the next stage of life, retirement, perhaps the needs of descendants, and so on.

But once all those different goals are on track, we’ve still got some choices to make. (It’s a nice problem to have, surely.)

As habits or hobbies or whole stages of life come and go, we might take a fresh look at our discretionary spending.

What if you started thinking about your legacy and impact as a regular part of your budget, now?

  • What are you not doing that you wish you were doing? Maybe you’d love to become a major contributor to a cause you’ve been volunteering for.
  • What do you wish your community had that it doesn’t have now? Maybe you could lead the driving force behind a park improvement, a new service for a preschool or senior care facility.
  • Where might your money save time for someone you care about? Maybe someday it would be your turn to be the benefactor of the local library foundation or to help the school go digital with its historical records.

Starting a project like this is just like budgeting for any other financial goal. Just ask the big question today: what would you have to change in order to afford this new choice?

We don’t mean to make any of this prescriptive. After all, you are the one who must live your life—not us! But there might be a chance to unlock some exciting opportunities, if only we get a little more intentional or organized now. Who knows?

Clients, if you would like to talk about this or anything else, please email us or call.

Want content like this in your inbox each week? Leave your email here.

Play the audio version of this post below:

What If Your Legacy Started Today? – 228Main.com Presents: The Best of Leibman Financial Services

This text is available at https://www.228Main.com/.

A New CEO: What Changes and What Doesn’t?

It’s an exciting development! You may have heard our announcement already, but effective January 1, 2026, Caitie Leibman here will be serving as CEO of Leibman Financial Services. Mark Leibman isn’t going anywhere, so what changes and what doesn’t with a new person in the front-facing role? This is a must-watch to get the latest from 228Main.com—online or on Main!

Want content like this in your inbox each week? Leave your email here.