new year

An Offer You Can’t Refuse

photo shows a cup of coffee next to a calendar

When you save money in an IRA, you get a benefit in the form of a tax deduction that reduces your liability come tax time. Unfortunately, all good things must come to an end, and these taxes are merely deferred: when you take distributions from your IRA, it gets taxed as income.

To make sure that the IRS gets its share, IRA owners are required to take out a percentage of their account value each year starting at age 72. This “required minimum distribution” (RMD) starts out around 4% and slowly grows with age according to life expectancy tables.

Beneficiary IRAs are also subject to RMDs, regardless of age. (The IRS has a vested interest in seeing that they are drained. They designed IRAs to help taxpayers fund retirement, not to sock away generational wealth with impunity.)

There has been some confusion about RMD rules in recent years because of multiple rule changes, including the requirement being waived altogether for 2020. There are no signs that Congress intends to waive RMDs for a second year, so anyone who is 72 or older by the end of 2021 will need to take out an RMD by December 31.*

No matter when your birthday is, you get complete discretion on when to take out your RMD. Some prefer to put it off as long as possible to keep the money at work in the market; some would just as soon have it in their pockets at the start of the year. It is up to you.

One notable exception for IRA holders: Roth IRAs do not have any mandatory RMDs. A Roth is funded with after-tax money, so the IRS has no interest in how you take money out or leave it in. If you are still saving up and counting down days until retirement, this is one advantage of a Roth that you should take into consideration.

Clients, if you want to talk about your RMD, please call or email us.

*Those turning 72 this year get a one-time extension and can put off their very first RMD until Tax Day next year, though we generally do not recommend this: these folks will still need to take 2022’s RMD out by the end of next year, so doubling up on distributions will create a lumpy tax bill.


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A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.

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.

20/20 Foresight

© Can Stock Photo / leolintang

The New Year is upon us. Like Opening Day of baseball season, the first day of school, or any other beginning, it is a good time for plans and planning.

We’ve been able to focus on strategic issues in recent weeks, ones that will shape our work for you in the years to come. The general theme? Build an enterprise that will serve you well, and be durable enough to outlive me.

While we work ON the business, of course, we also need to work IN the business, taking care of things for you. Fortunately, we know exactly what the stock market and the economy are going to do: go up and down, same as always. Time tested principles and strategies will always be the foundation of our work with you. They do not eliminate the ups and downs, but they improve the odds we will survive them and come out on the other side.

The items on our list are wide ranging. The more significant ones: finding and developing more good people to join the team, figuring out office space, determining whether we need to form our own Registered Investment Advisor, guiding the evolution of our offerings, and building a more robust financial planning process.

But enough about us. What about your strategic issues? If you want to talk about retirement, changing where you live, sorting out who should get what after you are gone, or simply where to invest for the long run, email us or call.