The Required Minimum Distribution and YOU

Feb 12, 2016

When planning for retirement, consumers are primarily concerned with figuring out how much they need to invest in order to comfortably live out their post-work years. This is important, but it’s also necessary to consider laws that impact how much of your retirement money you’ll be able to retrieve and when. One factor that impacts almost every retirement portfolio is the Required Minimum Distribution (RMD), a federally mandated minimum that must be withdrawn from your individual retirement account (IRA) each year.

No matter what type of IRA you have, you will be required to start withdrawing a certain amount each year, starting six months after your 70th birthday. And when you withdraw from your IRA and most other tax-deferred retirement accounts, you will have to pay taxes on the retirement funds you withdraw.

Even if you feel great about your accounts where they’re at when you reach the 70.5 mark, it is strongly recommended that you take out at least the minimum. If you don’t, you’ll have to pay a 50% penalty on the difference between the minimum and the amount you withdrew. You can, however, reinvest the money you withdraw through the acquisition of annuities and other financial products. You can also keep your RMD amounts to a minimum by contributing to a Roth Income Accounts (RIA) rather than a traditional IRA. RIAs, with a special annuity feature, can generate tax-free income for as long as you live.

At Brokers Alliance, we know you work hard for your money. We also know those who are best poised for retirement sacrifice frivolous purchases throughout their careers specifically to enjoy a comfortable retirement. To work with an annuity and retirement planning expert who can help you keep your tax-free income tax-free for life, call Brokers Alliance at (800) 290-7226. We’ll assess your situation, and offer expert advice on the financial products best suited to your situation.