First RMD Calendar Trap

So what does the first required minimum distribution deserve? More calendar planning than people expect, guys.

Well, I mean, there's a couple of things.

One, you've got to keep track of when you're going to have to take required distribution.

So right now, if you have not started to take it, you will start taking it at age 73 if you were born prior to 1960.

If you were born 1960 or after, you will have to take it at 75.

So why, back to your question, why does it deserve more calendar planning? And I'll give you an example that I did last night.

Let me just put some stats there.

That is based under current internal revenue.

Correct, yeah.

I can't even say it rules today as they are today.

Age 73 is your required.

I mean, I did a,

I did a, uh, uh, a plan for a guy last night and we were just talking about required distribution and he's retiring at age 60.

Um, and it's got about $2.3 million or so in an IRA.

And, um, We forecasted out now required distribution for him 75, so 15 years from now, and we just used a nominal return rate of like 4%, which you can easily get today.

But we used 4%, so okay, if the account grows by 4% every single year between now and 875, the number that came out for his required distribution at 75 would probably knock your socks off.

And so why is it important to look at that now? It's important to look at it now, and particularly in this case, because what we're able to do when we can forecast that is determine whether it makes sense for you to start doing things like Roth conversions or doing qualified charitable distributions or doing other things that can reduce the value of the IRA, which would in turn reduce the required minimum distribution.

And just for everyone's edification, the required distribution is based on the balance in the IRA at the end of the previous year that you have to start taking.

So if I have to start taking my required distribution in 2026, it's based on my IRA balance on December 31st, 2025.

Or the

total of all of your IRA balances.

Or the total of all your IRAs, that's

correct.

People sometimes have multiple IRAs.

So if you have an IRA, it is the total of all of those IRAs that you have to take into consideration.

So what does the first required minimum distribution deserve? More calendar planning than people expect, guys.

Well, I mean, there's a couple of things.

One, you've got to keep track of when you're going to have to take required distribution.

So right now, if you have not started to take it, you will start taking it at age 73 if you were born prior to 1960.

If you were born 1960 or after, you will have to take it at 75.

So why, back to your question, why does it deserve more calendar planning? And I'll give you an example that I did last night.

Let me just put some stats there.

That is based under current internal revenue.

Correct, yeah.

I can't even say it rules today as they are today.

Age 73 is your required.

I mean, I did a,

I did a, uh, uh, a plan for a guy last night and we were just talking about required distribution and he's retiring at age 60.

Um, and it's got about $2.3 million or so in an IRA.

And, um, We forecasted out now required distribution for him 75, so 15 years from now, and we just used a nominal return rate of like 4%, which you can easily get today.

But we used 4%, so okay, if the account grows by 4% every single year between now and 875, the number that came out for his required distribution at 75 would probably knock your socks off.

And so why is it important to look at that now? It's important to look at it now, and particularly in this case, because what we're able to do when we can forecast that is determine whether it makes sense for you to start doing things like Roth conversions or doing qualified charitable distributions or doing other things that can reduce the value of the IRA, which would in turn reduce the required minimum distribution.

And just for everyone's edification, the required distribution is based on the balance in the IRA at the end of the previous year that you have to start taking.

So if I have to start taking my required distribution in 2026, it's based on my IRA balance on December 31st, 2025.

Or the

total of all of your IRA balances.

Or the total of all your IRAs, that's

correct.

People sometimes have multiple IRAs.

So if you have an IRA, it is the total of all of those IRAs that you have to take into consideration.