Planning Tips for those Approaching the IRA Required Minimum Distribution Age

There are many things to consider when approaching 701/2 the age for required minimum distributions from IRAs. The following is just brief summary of some of the items that should be discussed with your attorney, accountant, and financial advisors in the year leading up to the first RMD.

How do you Plan on Using the Money?
Will it be used to live off of, provide for a spouse, or will the money be used to pass onto the next generation? These are important questions to ask for a couple of reasons. If the money is going to be used to live off of, it is important to determine how much needs to be withdrawn, it might be more than the minimum required. If the money is going to be passed on to the next generation it is important to think about how to reinvest the money after withdrawing the required amount.

Have you Checked your Beneficiaries?
Make sure the correct individuals are listed as your beneficiaries. This will help with post death planning and also ensure that the assets are directed to the correct individuals. It is also important to look at this after major life events, such as death, divorce, marriage, or birth of children/grandchildren.

Do you have More than one IRA?
It is important to determine which IRA you want to withdraw the funds from. Distributions are computed separately but the money can be withdrawn from one account rather than a bucket of money coming out of each account.

Do you have a favorite charity?
If so, consider using retirement plan assets to fund charitable gifts. For 2011, up to $100,000 RMD can go toward a charity. You don’t receive a charitable deduction on schedule A, but the RMD is not taxed so it will result in tax savings.

These are just a summary of some of things to consider, it is important to discuss these items with all of your advisors as well as your family.