What You Need to Know About Taking that First RMD

RmdsIf you turned 70½ last year but did not take the required minimum distribution (RMD) from your IRA, then you had until April 1 of this year. So, did you make it in time?

Although the IRS is extending the April 15 deadline for filing your tax return to the 18th this year because of the weekend and a Washington, D.C., holiday, there was no break or delay coming for taking your required minimum distribution (RMD).

If you turned 70½ in 2016, you were required to take your first RMD by April 1, 2017 (if you haven't already withdrawn the money). If you didn’t, you'll pay a penalty that’s equal to 50% of the amount of money you should have withdrawn.

Note that if you delayed taking your first RMD, you’ll also have to take the one for age 71 by December 31 of this year. That withdrawal can increase your adjusted gross income a bit. It may also bump you into a higher tax bracket.

In addition, it could make you subject to the Medicare high-income surcharge, if your adjusted gross income (AGI)—plus tax-exempt interest income—totals more than $85,000 if you’re single or $170,000 if you are married and filing jointly.

A good way to shelter your required withdrawal from your AGI, is to make a tax-free transfer from your IRA to a charity. If you're 70½ or older, you can transfer up to $100,000 per year to a charity from your IRA. This will count as your RMD, but it isn't included in your adjusted gross income.

Reference: Kiplinger (March 15, 2017) “Meeting Your First RMD Deadline”


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Update to our Process

The unprecedented coronavirus pandemic has taken our entire country by surprise. We understand how difficult this time is for America’s businesses and families.  However, we believe it is vitally important that we make every effort possible to continue to offer solutions that avoid disrupting our important partnership with you, your family and friends.  As you know, estate planning is not something that should wait for a more convenient time, therefore the opportunity to address your important goals both during and after this crisis should not wait.  To that end, we have added the option of a ‘virtual consultation’ to our office process.  You will now have a choice of either meeting with us in our office or in the comfort of your own home.