Have an RMD Coming Your Way This December? 3 Ways to Make the Most of It.

Core Insights - Many individuals prefer saving for retirement in tax-advantaged accounts like IRAs or 401(k) plans due to the tax benefits associated with these accounts compared to taxable brokerage accounts [1][2] Group 1: Tax Advantages and Disadvantages - Traditional IRAs and 401(k) plans provide tax breaks on contributions and allow for tax-deferred growth, postponing tax liabilities until withdrawals are made [2] - A significant drawback of these retirement plans is the requirement to take required minimum distributions (RMDs) at a certain age, which can complicate financial planning [2][4] Group 2: Managing RMDs - RMDs can be manageable if individuals have existing financial plans, such as supplementing Social Security benefits with regular withdrawals [3] - However, RMDs can increase annual tax bills and limit the ability to grow investments in a tax-advantaged manner [4] Group 3: Options for RMD Utilization - Individuals can invest their RMDs in a regular brokerage account, allowing the funds to potentially grow over time, even if there is no immediate need for the money [5] - Another option is to donate RMDs to charity, which can be done through a qualified charitable distribution (QCD) to avoid taxes on the amount donated [8]