Should I Take My RMDs Early This Year? - Adviser Investments

Should I Take My RMDs Early This Year?

February 4, 2022

Investors in retirement know that they have to withdraw a certain amount from tax-deferred retirement accounts every year. When is the best time to do so—as soon as the calendar flips to a new year or waiting until December? Vice President Kari Wolfson shared her advice on taking RMDs in our recent webinar, Diversification Is Dead…and Other Modern Myths.*

Please enjoy the excerpt below and click here for the full webinar replay with more informed insights you can use. 

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Kari Wolfson:

I couldn’t help but smile when I heard that question, because clients ask that often, and each approach has its pros and cons. The answer has little to do with market timing, though. It’s more about your financial plan and focusing on what you can control, which is your cash flow needs.

For some, the advantages of taking RMDs early outweigh the unknowns of delaying: You can get it over with and then don’t have to worry about it for a year. This is especially true if you are relying on your RMD for supplemental income to pay your expenses throughout the year.

It makes the most sense to take the money when you need it. If you don’t need it for living expenses, you can still take it early if you’re worried about market volatility and other unknowns. You can reinvest the distribution and spend it gradually over the years you need it, or you can keep it invested for the long term. Taking it early also opens the opportunity for possible Roth conversions throughout the year, because you do have to take your RMD before you can make any Roth conversions.

On the other hand, delaying it until the end of the year means you maximize the tax-deferred growth for the entire year and you also delay the income tax due on the distribution for as long as possible.

Click here for a replay of Diversification Is Dead…and Other Modern Myths. Please contact us at (800) 492-6868 to learn more about comprehensive wealth management solutions.


*Webinar recorded after the market closed on Wednesday, January 26, 2022.

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