IRA RMD’s? Try ABC’s

Required Minimum Distributions (RMD’s) are familiar to almost anyone with a retirement account. For your own IRA, they begin at age 70 1/2. For an IRA you’ve inherited, they begin right after your loved one’s death. Studies show more RMD’s are taken in the 4th quarter than the first 9 months of the year. Rather than putting it off, try these A-B-C ways to make RMD’s special.

A – Anniversary recognition. Especially if you inherited the IRA, taking the RMD on the anniversary of your loved one’s loss can be a way to remember the special gift they left you.

B – Birthday present for yourself. Whether it’s your own money or inherited, use at least part of the RMD during your birthday month to do or buy something special only for you.

C – Charitable donation. If you aren’t able to itemize deductions, either because you don’t have enough deductions or are phased out of them, sending part of your RMD direct to a qualified charity allows you to avoid the taxable income. This can be financially valuable as a way to get a deduction you otherwise would not, but also emotionally valuable to see the impact of your gift.

Some people even combine two of the three and give a charitable donation as a birthday present to themselves, or in memory of their loved one.

Whether you are taking them now or will in the future, be intentional about RMD’s. Rather than feeling like a last-minute task of the year, use the requirement to make some fun or meaningful memories.

Holly Donaldson

Holly P. Donaldson, CFP® writes and consults on the psychology of money. Her fee-only, product-free financial planning practice focuses on increasing financial self-efficacy for those seeking a financial navigator to help them make good decisions. She is the author of The Mindful Money Mentality: How to Find Balance in Your Financial Future (Porchview Publishing, 2013) and publisher of the award-winning monthly e-letter, "The View From the Porch." With a fully virtual practice in Seminole, Florida, she primarily serves clients located in the Tampa, St. Petersburg, and Clearwater areas. Holly will also work with clients who are a good fit located elsewhere in the United States.

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