Some retirees received an unexpected present from Congress just before Christmas. The age at which Required Minimum Distributions (RMDs) from qualified retirement plans must begin was lifted from 72 to 73, effective in 2023. In 2033 the age requirement jumps again to 75. Of course, those who will turn 73 in 2023 already turned 72 in 2022 and so have already had their first RMD in most cases.
Still, the change is welcome for those who do not need to draw from their tax-deferred retirement accounts for routine living expenses. They will get another year of growth. They should have a lot of money to withdraw over fewer years, which means still more significant RMDs. The only downside is that the increase might push them into a higher tax bracket.
To offset that potential problem, retirees should consider the “charitable IRA rollover.” Up to $100,000 may be directly transferred from an IRA to a qualified charity. Such a transfer will not be added to taxable income but will count as an RMD.
Some taxpayers have been simply directing their RMDs to their favorite charities each year, simplifying their finances. Note: This option is limited to those aged 70½ and up (that age requirement was not changed when the RMD start age was lifted). A husband and wife may make transfers of up to $100,000, but only if each has an IRA.
We at Legacy want you to have the peace of mind that results from comprehensive and thoughtful retirement planning. Retirement is an achievement, and you have earned the right to enjoy it to the fullest. We invite you to experience Legacy’s reassuring approach to retirement planning.
If you are a Legacy client and have questions, please do not hesitate to contact your Legacy advisor. If you are not a Legacy client and are interested in learning more about our approach to personalized wealth management, please contact us at 920.967.5020 or firstname.lastname@example.org.
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It is not intended as legal, accounting, or financial planning advice.