Required Minimum Distributions (RMDs)

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Can I Move My Required Minimum Distributions Into a Roth IRA?
Yahoo Finance· 2025-09-16 11:00
Core Insights - Investors must begin taking required minimum distributions (RMDs) from tax-deferred accounts at age 73 or 75, depending on their birth year, which can result in significant cash that may not be needed for living expenses [1][2] - A Roth IRA is suggested as a suitable option for reinvesting unneeded RMD cash due to its tax-free withdrawals and exemption from RMDs during the account holder's lifetime [1] Group 1: RMDs and Roth IRA Contributions - Direct conversion of RMDs to a Roth IRA is not allowed, but individuals can contribute to a Roth IRA if they have sufficient earned income, with a contribution limit of $7,000 plus an additional $1,000 for those aged 50 and above for 2024 [2] - Earned income includes wages, commissions, bonuses, and self-employment income, while it excludes pension payments, interest, dividends, rental income, and other non-qualifying sources [3] Group 2: Income Limits and Withdrawal Rules - Roth IRA contributions are subject to income limits, with phase-out starting at a modified adjusted gross income (MAGI) of $146,000 for single filers and $230,000 for joint filers, becoming ineligible after $161,000 and $240,000 respectively [4] - A five-year waiting period is required after the first contribution to a Roth account before withdrawals can be made, and heirs must withdraw the entire balance within 10 years [5] Group 3: Alternatives to Roth Contributions - For those unable to contribute to a Roth IRA, options exist to eliminate, reduce, or delay RMDs, including converting an IRA to a Roth account after taking the RMD for the year, with taxes applicable on the converted amount [6]
Ask an Advisor: We're 70 With $99k in Income and $1.4M in Savings. Is It Too Late for a Roth Conversion?
Yahoo Finance· 2025-09-15 14:00
Group 1 - The ability to convert to a Roth IRA is not limited by age, and there is no earned income requirement for conversion [1][2] - The primary consideration for a Roth conversion should be whether it aligns with the goals for the legacy of wealth, especially as individuals approach required minimum distributions (RMDs) [2][3] - Financial advisors can assist in managing the tax implications of a Roth conversion strategy [3] Group 2 - If the intention is to leave wealth to a charity, converting to a Roth may not be beneficial, as taxes would not be due on the IRA balance when passed to a qualified charity [5] - Conversely, if the goal is to leave wealth to family members, converting the IRA to a Roth could ensure that beneficiaries receive tax-free assets, although it may not maximize tax savings [7][8]
Do 401(k) Withdrawals Before Age 73 Apply to My RMD Requirements?
Yahoo Finance· 2025-09-12 20:00
RMD Essentials - The taxes on funds in tax-deferred accounts like 401(k) are delayed, not avoided, and income taxes are due upon withdrawal [4] - Required Minimum Distributions (RMDs) start at age 73, preventing indefinite tax-free growth of retirement savings [4] RMD Rules - RMD rules are strict, and withdrawals before RMDs do not reduce future RMD amounts [5] - Excess withdrawals after RMDs have begun also do not directly affect future RMD calculations [5] Impact of Withdrawals - Taking withdrawals now or later in excess of RMD amounts can lower the account balance, which in turn reduces future RMDs [6] - Withdrawals are taxed as normal income regardless of when they are taken, making early withdrawals potentially beneficial if a higher tax bracket is anticipated post-retirement [6] Additional RMD Strategies - Working after retirement may allow for the delay of RMDs, applicable only to current employer's 401(k) plans [7] - RMDs must still be taken from 401(k) plans from previous employers, and stopping work triggers the need to start RMDs [7]
We're 66 With $1.4M in IRAs and $4,100 Social Security Income. How Should We Build Our Retirement Budget?
Yahoo Finance· 2025-09-12 11:00
Core Insights - Retirement planning should be approached through a "bucket" strategy, categorizing income needs into lifestyle, needs, aspirational, and estate buckets [4][3][6] - A couple with $1.4 million in IRAs and $4,100 monthly from Social Security can expect an annual retirement income of approximately $108,000, but actual needs may vary based on individual circumstances [5][16] Income Sources - Retirement income typically comes from Social Security, pensions, and retirement accounts, with the example couple relying on $4,100 monthly from Social Security and $1.4 million in IRAs [7][5] - Delaying Social Security benefits can significantly increase annual income, with potential benefits of $52,733 at age 67 and $65,388 at age 70 [8] Withdrawal Strategies - The 4% rule is a common guideline for withdrawals, suggesting that a $1.4 million IRA could yield about $56,000 annually [8] - Combining Social Security and a 4% withdrawal rate results in an estimated total income of $108,733 per year [9] Tax Considerations - Withdrawals from IRAs are subject to income tax, and 85% of Social Security benefits may also be taxable depending on the adjusted gross income [13] Budgeting for Retirement - Retirement budgeting should start with understanding spending needs rather than solely focusing on income [17] - New expenses in retirement, such as long-term care insurance and gap insurance, should be factored into the budget [14] Inflation and Emergency Funds - Inflation is a critical consideration in retirement planning, as prices can double approximately every 30 years at a 2% inflation rate [15] - Maintaining an emergency fund is essential to cover unexpected expenses, although liquid cash may be eroded by inflation [19]
I'm 62 With $900k in My 401(k). Should I Move $90k Per Year to a Roth IRA to Minimize Taxes and RMDs?
Yahoo Finance· 2025-09-10 20:00
Core Insights - The article discusses the implications of Required Minimum Distributions (RMDs) for pre-tax retirement accounts and the potential benefits of converting to a Roth IRA to avoid taxes and RMDs in retirement [1][6][23] Group 1: Required Minimum Distributions (RMDs) - RMDs are mandatory withdrawals from pre-tax retirement accounts starting at age 73, calculated based on the account's value and the account holder's age [2][6] - Withdrawals from pre-tax portfolios are taxed as ordinary income, meaning the entire withdrawal amount is subject to income tax rates rather than lower capital gains rates [3][6] Group 2: Roth IRA Conversions - Converting to a Roth IRA can eliminate RMD requirements and taxes on withdrawals, making it an attractive option for many households [5][7] - Roth conversions require paying upfront taxes on the converted amount, which can significantly increase taxable income for the year of conversion [9][10] Group 3: Tax Implications of Conversions - For example, converting a $900,000 401(k) to a Roth IRA could raise an individual's taxable income from $75,000 to $975,000, resulting in a substantial tax liability [10][11] - Staggered conversions, where smaller amounts are converted over time, can help manage tax brackets and reduce overall tax liability compared to a lump-sum conversion [14][15][16] Group 4: Considerations for Conversion - The decision to convert should consider long-term savings versus upfront conversion taxes, especially as individuals approach retirement [18][23] - While a Roth IRA can provide tax-free growth and withdrawals, the timing of the conversion is crucial to maximize benefits and minimize tax burdens [22][26]
I'm 78 With $735k in my 401(k). How Should I Handle My RMDs?
Yahoo Finance· 2025-09-10 12:06
Group 1 - The IRS mandates required minimum distributions (RMDs) from pre-tax retirement accounts starting at age 73, which can be a challenge for those wishing to withdraw less than the required amount [3][5] - RMDs are calculated based on the account balance at the end of the previous year and the individual's age using life expectancy tables [6][7] - Individuals can withdraw more than the required amount, but RMDs cannot be rolled into another retirement account; excess funds can be transferred or converted [4][5] Group 2 - Financial advisors can assist in calculating RMDs, planning withdrawals around taxes, and deciding on the use or reinvestment of the withdrawn funds [2] - RMDs must be taken separately for each account type, with the full annual RMD required by December 31, except for the first year when individuals turn 73 [5] - Planning for RMDs involves reviewing past withdrawals, income, tax brackets, and aligning future distributions with financial goals [9]
I'm 59 With $1.3 Million in a 401(k). Should I Move $130k Per Year to a Roth IRA to Avoid RMDs?
Yahoo Finance· 2025-09-09 11:00
Core Insights - Converting a 401(k) into a Roth IRA offers tax-free qualified withdrawals and exemption from required minimum distributions (RMDs), providing flexibility and potential tax savings in retirement [1][5] Group 1: Roth Conversion Benefits - Roth conversions allow for tax-free withdrawals and can help avoid RMDs, which start at age 73 and can increase tax liabilities due to ordinary income treatment [5][6] - Converting gradually over a decade can mitigate tax impacts compared to a lump-sum conversion, which could push individuals into the highest tax bracket [2][8] Group 2: RMDs and Tax Implications - RMDs can significantly increase taxable income, potentially raising the marginal tax rate; for example, a $1.3 million 401(k) could lead to an initial RMD of over $104,000, increasing the tax rate from 12% to 24% for a single filer with additional income [6][5] - The RMD age will shift from 73 to 75 starting in 2032, affecting withdrawal strategies for retirees [6] Group 3: Conversion Strategies - A lump-sum conversion of $1.3 million would incur over $430,000 in taxes, while annual conversions of $130,000 could significantly lower the tax burden [8] - Consulting a financial advisor is recommended for personalized strategies regarding Roth conversions and RMD planning [3][7]
RMDs explained | 5 Questions with Fidelity | Fidelity Investments
Fidelity Investments· 2025-08-07 17:24
Starting at age 73, the IRS requires you to make annual withdrawals from your tax-deferred retirement accounts. But how much should you withdraw? Should you make a large withdrawal in January or smaller ones throughout the year? Are there tax implications? Should you reinvest the money? This episode of 5 Questions with Fidelity has answers to all these questions and is full of strategies to help you manage your RMDs. prepared for retirement. 00:00: Welcome to 5 Questions with Fidelity 00:31: What are requir ...
How Fed rate cuts impact your money, tax-advantaged accounts to build wealth, RMDs explained
Yahoo Finance· 2025-06-27 18:27
Market Trends & Investment Strategies - The market is focused on the Federal Reserve's anticipated interest rate cuts and their implications for debt and money [1] - Understanding tax-advantaged accounts like Roth IRAs, 401(k)s, IRAs, and HSAs is crucial for retirement savings and wealth building [1] - Many retirees will face required minimum distributions (RMDs) at a certain age, and it's important to understand RMDs and how to avoid penalties [1] Resources & Information - Yahoo Finance provides free stock ticker data, up-to-date news, portfolio management resources, comprehensive market data, and advanced tools [1] - Yahoo Finance can be accessed through its website (financeyahoo-com) and mobile apps on Apple and Android [1] - Yahoo Finance is active on social media platforms including X, Instagram, TikTok, Facebook, and LinkedIn [1]