A Safer Retirement and Environment – What We’re Implementing to Help Keep You Safe: READ MORE

Here at Chadmere Capital Inurance and Financial Services, we are adhering to state and local guidelines in order to protect both the health and safety of clients and staff. Keeping our clients and staff safe is our highest priority and we’re taking all appropriate measures to ensure a safe environment. Should you prefer to not meet face-to-face, we are continuing to serve our clients through virtual settings such as Zoom or phone calls.

We look forward to continuing to help individuals and families achieve their ideal retirements.

Chademere Capital Insurance and Financial Services
(803) 242-1050

CLOSE

4 WAYS TO REDUCE YOUR RMD TAX BITE

By Sarah Brenner, JD
Director of Retirement Education
Follow Us on X: @theslottreport

Markets continue to climb. That is good news for your retirement account. However, there is a downside. When you contribute to a traditional IRA or a pre-tax 401(k), you make a deal with Uncle Sam. You can get a tax deduction and tax deferral on any earnings in your account. However, eventually the government is going to want its share and will require funds to come out of these accounts. That is when you must start required minimum distributions (RMDs). You may not need the money, and you may not want the tax hit. Bigger retirement account balances can mean larger tax bills. Here are some strategies that can help reduce your RMD tax bite.

1: Do a Qualified Charitable Distribution (QCD)

If you are planning on giving money to charity anyway, why not do a Qualified Charitable Distribution (QCD) from your IRA? For 2024, if you are age 70 ½, you may transfer up to $105,000 annually from your IRA to a charity tax-free. The QCD can also satisfy your RMD (if the QCD is made before the RMD is taken), but without the tax hit. QCDs are not available from employer plans.

2: Use the Still-Working Exception

Are you still working after age 73? If you do not own more than 5% of the company where you work and the company plan offers a “still working exception,” you may be able to delay taking RMDs from your company plan until April 1 following the year you retire. The still-working exception is not available for IRAs but if your plan allows, you can roll your pre-tax IRA funds to your plan and delay RMDs on these funds too. Just be careful. If you have an RMD for that year from your IRA, you must take it before you can roll over the rest of the funds.

3: Consider a Qualified Longevity Annuity Contract

A Qualifying Longevity Annuity Contract (QLAC) is a product designed to help with longevity concerns. Any funds you invest in the QLAC are not included in your balance when it comes to calculating your RMDs until you reach age 85. This will reduce your RMDs. SECURE 2.0 has changed the rules for QLACs by increasing the dollar limit and doing away with restrictions on the percentage of the account limits. The maximum QLAC limit is now $200,000 per person.

4: Convert to a Roth IRA

If reducing the taxation of RMDs is a top concern for you, you may want to consider a Roth IRA conversion or an in-plan 401(k) conversion. This is because you are not required to take RMDs from your Roth IRA or Roth 401(k) during your lifetime. Keep in mind you will need to take your 2024 RMD from your traditional IRA prior to converting to a Roth IRA. Also, both Roth IRA conversions and in-plan 401(k) conversions are taxable events. There is a big payoff though. You will never have to worry about the tax bite of an RMD ever again.

https://irahelp.com/slottreport/4-ways-to-reduce-your-rmd-tax-bite/

Ready To Take

THE NEXT STEP?

 

For more information about any of our products and services, schedule a meeting today.

Or give us a call at (803) 242-1050

Investment advisory services offered through Foundations Investment Advisors, LLC (“Foundations”), an SEC registered investment adviser. Nothing on this website constitutes investment, legal or tax advice, nor that any performance data or any recommendation that any particular security, portfolio of securities, transaction, investment or planning strategy is suitable for any specific person. Personal investment advice can only be rendered after the engagement of Foundations, execution of required documentation, and receipt of required disclosures. Investments in securities involve the risk of loss. Any past performance is no guarantee of future results. Advisory services are only offered to clients or prospective clients where Foundations and its advisors are properly licensed or exempted. For more information, please go to https://adviserinfo.sec.gov and search by our firm name or by our CRD #175083.

 ADV Part 2A & Form CRS              Privacy Policy