From Kiplinger · · 1m 30s
3 Niche Ways to Cut RMD Taxes
Financial planner reveals 3 strategies to delay or reduce taxes on required minimum distributions.
In brief
Financial planner reveals 3 strategies to delay or reduce taxes on required minimum distributions. Retirees can skip first RMD, buy QLACs, or keep working to delay taxes on retirement funds without triggering penalties. Originally reported by Kiplinger.
RMDs and Tax Pain
Retirees often hate required minimum distributions because of high taxes and potential Medicare premium hikes.
First RMD Deferral
Skip your first RMD to avoid tax spikes if income drops significantly in the following year.
QLAC Tax Benefit
QLACs allow moving up to $210,000 per person from ira into tax-deferred income streams.
Income Spikes and RMDs
RMDs can be delayed if income spikes from inheritance, home sales, or business sales in the current year.
QLAC Longevity Risk
QLACs defer income until age 85, making them a longevity insurance tool rather than a tax strategy.
Working Past Retirement
Retirees can defer RMDs from employer plans if they continue working and own less than 5% of the company.
Tax Tail Wagging Dog
Tax deferral strategies can create a tax tail wagging the investment dog, but may benefit those focused on taxes.
RMD Tax Traps
Most retirees spend more than their RMDs annually, making tax deferral strategies an uptown issue for tax-focused retirees.
No Complete Tax Elimination
Complete tax elimination on RMDs is impossible without qualified charitable distributions.
Future Tax Rates Matter
Tax deferral strategies only make sense if future tax rates are expected to drop.
At a glance
Retirees can skip first RMD, buy QLACs, or keep working to delay taxes on retirement funds without triggering penalties.
