To RMD or Not To RMD….

By Josh Espinosa, CFP®, CIMA®, and Jasen Gilbert, CFP®

Spring has always been a special time of the year for us. For years we have had a standing tradition of getting together to enjoy offshore fishing and catching any of the great Bluewater pelagic species including Mahi, Tuna, and Wahoo. Once in a while, we are even lucky enough to catch and release a billfish.  

What we have learned over the years is that a successful trip is a result of having a good plan, teamwork, and the right tools. How does this relate to financial and retirement planning?  

Currently, account holders of Individual Retirement Accounts (IRA’s) and defined contributions plans who have reached the age of 72 (previously 70 1/2), are required to take an annual required minimum distribution (RMD), withdrawing a percentage of their account value. In response to the recent pandemic and economic fallout, the CARES Act federal stimulus package waived the RMD requirement for 2020. This provision aims to give retirees’ account balances more time to recover before RMDs resume in 2021.    

When it comes to deciding whether or not it makes sense to waive your RMD for this year, there are some factors to consider. For example:

1. If you don’t need the income, then you might consider stopping your distributions for 2020.
2. Individuals who had already taken their RMD’s in 2020 might be able to roll it back into their account or another eligible retirement account. If you were diagnosed with COVID-19 there are other options as well.
3. This could be a great time to consider establishing a Roth IRA with assets that would otherwise have been taken as RMD’s. As the account is considered after-tax, there is also no taxable consequence for withdrawals taken after the first 5 years.
4. Under the new SECURE Act, Roth IRA assets must be distributed to the beneficiaries within 10 years. This applies to certain IRAs as well.
5. For certain select cases, a Roth conversion may be an option for you.

Again, the rules can be complex, so please speak with your financial advisor or tax professional regarding this and other RMD planning opportunities.

When it comes to your financial and retirement plan, we think that there is no substitute for having a good plan and team in place to navigate these financial waters and hopefully take advantage of some opportunities along the way.  

If you would like to learn more about the CARES Act and other planning opportunities, please join us on May 19, 21, and 27 as we partner with the Blue Zones of Southwest Florida for a series of virtual financial workshops. Please see the following link for the invite and event details: 

tiny.cc/BZPfinance

Update:

Due to current conditions, we feel it is best to continue to meet with you either by phone or video conference only. If you would like to meet via video please let us know when we call to schedule your next meeting.

Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation.  Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.