Part of getting older in life means dealing with ailments, sicknesses and injuries. Fortunately, some of these are treatable and curable. The same can be said for your pre-taxed retirement account. If you own one of these accounts, you will be getting the RMDs at some point. So, can you get rid of them?
RMDs (Required Minimum Distributions) are the government’s way of collecting tax revenue on your retirement plan dollars. They gave you a tax deduction for all those years while you were contributing, and now they want their money back. And not only do they want tax revenue on the amount that you contributed, but they collect tax on the entire amount of the account, including all the interest that you have earned. They do this by forcing you to start drawing money out of the account every year once you reach the age 70 ½ , and increasing the percentage you have to take each year. If you fail to do this, there are very, very steep penalties.
Now, some people don’t mind the RMDs as they need the income for retirement. Others, however, do not need the income and view RMDs as a severe ailment that causes them excessive taxation. So, is there any way around this? Is there a cure or anything you can do to treat or get rid of taxable RMDs? To the surprise of many, the answer is yes.
Fortunately, because of some recent favorable tax rulings, there are now actually a couple of treatments available that can get rid of the RMDs. Start learning how to protect yourself by registering for one of our upcoming retirement planning workshops here.