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        Financial Focus                         ®

        What Should you Know

        about Rmds?

        By Sally Sima Stahl
          You may spend decades
        contributing to various
        retirement accounts.
        But for some accounts,
        such as a traditional IRA
        and  401(k),  you  must
        start withdrawing funds
        at a certain point. What
        should you know about
        this requirement?
          To begin with, the
        rules governing these withdrawals – technically called
        required minimum distributions, or RMDs – have
        changed recently. For many years, individuals had to
        begin taking their RMDs (which are based on the account
        balance and the IRS’ life expectancy factor) when they
        turned 70½. The original SECURE Act of 2019 raised
        this age to 72, and SECURE 2.0, passed in 2022, raised
        it again, to 73. (If you turned 73 in 2023, and you were
        72 in 2022 when the RMD limit was still 72, you should
        have taken your first RMD for 2022 by April 1 of this
        year. You will then need to take your 2023 RMD by
        Dec. 31. And going forward, you’ll also need to take
        your RMDs by the end of every year.)
          Not all retirement accounts are subject to RMDs. They
        aren’t required for a Roth IRA, and, starting in 2024,
        won’t be required for a Roth 401(k) or 403(b) plan. But
        if your account does call for RMDs, you do need to take
        them, because if you don’t, you could face tax penalties.
        Previously, this penalty was 50 percent of the amount you
        were supposed to have taken, but SECURE 2.0 reduced
        it to 25 percent.
          When you take your RMDs, you need to be aware of
        a key issue: taxes. RMDs are taxed as ordinary income,
        and, as such, they could potentially bump you into a higher
        tax bracket and possibly even increase your Medicare
        premiums, which are determined by your modified
        adjusted gross income. Are there any ways you could
        possibly reduce an RMD-related tax hike?
          You might have some options. Here are two to consider:
          • Convert tax-deferred accounts to a Roth IRA
        account. You could convert some, or maybe all, of your
        tax-deferred retirement accounts to a Roth IRA. By
        doing so, you could lower your RMDs in the future –
        while adding funds to an account you’re never required
        to touch. So, if you don’t really need all the money to
        live on, you could include the remainder of the Roth
        IRA in your estate plans, providing an initially tax-free
        inheritance to your loved ones. However, converting a
        tax-deferred account to a Roth IRA will generate taxes
        in the year of conversion, so you’d need the money
        available to pay this tax bill.
          • Donate RMDs to charity. In what’s known as a
        qualified charitable distribution, you can move up to
        $100,000 of your RMDs directly from a traditional IRA to
        a qualified charity, avoiding the taxes that might otherwise
        result if you took the RMDs yourself. After 2023, the                                                          747-PALM
        $100,000 limit will be indexed to inflation.
          Of  course,  before  you  start  either  a  Roth  IRA                                                             747-7256
        conversion or a qualified charitable distribution, you will
        need to consult with your tax advisor, as both these moves
        have issues you must consider and may not be appropriate
        for your situation.
          But it’s always a good idea to know as much as you
        can about the various aspects of RMDs – they could play   Peripheral
        a big part in your retirement income strategy.
          This article was written by Edward Jones for use by   Neuropathy?
        your local Edward Jones Financial Advisor, Edward
        Jones, Member SIPC.
          Edward Jones is a licensed insurance producer in   FREE Consultation
        all states and Washington, D.C., through Edward D.
        Jones & Co., L.P., and in California, New Mexico and
        Massachusetts through Edward Jones Insurance Agency   for Acupuncture
        of California, L.L.C.; Edward Jones Insurance Agency of
        New Mexico, L.L.C.; and Edward Jones Insurance Agency
        of Massachusetts, L.L.C.
          Edward Jones, its employees and financial advisors
        cannot provide tax advice. You should consult your
        qualified tax advisor regarding your situation.
          Contact us at (561) 748-7600, Sally Sima Stahl, AAMS,                                                        561-745-1002
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