You see age 72 around the corner yet you don't want to start paying tax on any portion of your retirement account. At age 72, the government is eager to begin collecting tax on all of your deferred income and growth inside your IRAs and 401(k)s, but you want to avoid paying the tax. What can you do?
There are a least four legitimate strategies to delay or avoid taking RMDs. Only one will be discussed in this quick article; the other three are Roth conversions, Qualified Charitable Distributions (QCDs), and Qualified Domestic Relation Orders (QDROs) - which will be discussed in future posts.
Here is one simple way to delay taking RMDs: If you are age 72 or older and work enough hours to qualify for your employer’s 401(k) plan, then you can - if your employer 401(k) plan allows - roll over your traditional IRA and any old 401(k) into the employer 401(k) plan. As long as you are eligible to contribute to the 401(k) plan, then you would not be forced to take your RMD. One important note, if you own 5% or more of the company for whom you are working, then you are unable to follow this strategy.
Please contact us if you’d like to learn more about methods of delaying or avoiding paying tax on Required Minimum Distributions (RMDs).