BSMG Blog: Protecting the Future of Families and Businesses

Optimizing Required Minimum Distributions

Required Minimum Distributions (RMD) are always a hot button with brokers and clients, especially recently when Donald Trump asked the Treasury Department to examine RMD life expectancy and distribution tables due to longer life expectancy and more people working well into their 70’s. Nevertheless, RMDs “are what they are”, a required distribution that every individual who turns 70.5 must start taking from their IRAs. At its simplest level, an RMD will be withdrawn and either deposited into a client’s checking account, or reinvested. Let’s look at other ways to utilize an RMD.

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6 Reasons Your Clients May Have Multiple IRA Accounts

The IRS announced the “one rollover per year” rule in 2014, which is an important rule to keep in mind when planning for multiple IRA accounts. IRC Section 408(d)(3)(B) has been interpreted by the IRS to mean that an IRA owner can only do one 60-day IRA to IRA rollover per year. However, the IRS also reaffirmed that an unlimited number of “direct transfers” can be made when transferring funds directly from one IRA account to another IRA account.

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RMD Planning Options for Clients with Multiple IRAs

At one point or another, you have encountered a client who has multiple IRA accounts that may have been created at different times with different funding products. You may have even recommended two separate IRA accounts to a client, each with different financial purpose for different designated beneficiaries. In either one of these events the US Treasury Regulations treat certain IRA accounts differently when it comes to distributing IRA Required Minimum Distributions (RMD) from these accounts once the client reaches age 70½. 

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Approach to Take With Clients Who Don't Need Their IRA RMDs

Let’s begin to review the way we tend to look at our clients’ IRAs when they don’t need their Required Minimum Distributions (RMDs).

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