Financial Planning Toolkit for Single Women [and the people who love them]

This month I advised a client who was unhappy that he had to take a distribution from his IRA this year. The year you turn 70½ you must start taking required minimum distributions (RMDs) from your Traditional IRA accounts. (Technically your first year you have until April 1st of the following year, but every year thereafter the deadline is 12/31).

This client was not happy about this forced distribution as he does not need the money.

The penalty for not doing an RMD is steep – 50% of what you were supposed to take! The government wants its money, the tax bill eventually comes due on these pre-tax tax-deferred accounts.

The good news is in this case, his wife, a few years younger and still working, could increase her 401(k) contribution thereby canceling out the tax bill of the Required Minimum Distribution!

One example of how tax planning saves money. And it’s fun.

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