Managing Your IRA Required Minimum Distributions

Next year, I got to start taking the requirement distribution. The rest of my assets are pretty much in cash, so I’m thinking it would make the most sense for me to take the required minimum distribution from the IRA and let that grow tax free for as long as possible and then make up the rest of what I need to live on from the other assets. Does that sound right to you? Well, I would pay close attention to what.

What your tax bracket is. The other thing that I would encourage you to do is if you do any giving to any nonprofits, your church or other ministries, or if you’re going to make a gift to preborn, you can do what’s called a qualified charitable distribution. And that’s where you give directly from your IRA to a nonprofit, and you get to get that money out tax free as long as you, you know, follow the rules to do that.

So now you can shift over. I would shift over all of your. Do you itemize or do you use a standard deduction? Right now we just use a standard deduction.

Okay. Even better. So right now, you know, whatever you get to deduct from your income from.

From the standard deduction, you pay 0% tax on that. Right. So you’re deducting that from your taxable income.

The way that the qualified charitable distribution works is it can. It counts toward your required minimum distribution. So it counts toward the amount that you have to take out, because all of your distributions are going to be reported on your 1099 when you get it at the end of the year.

And that’s how the government makes sure that you’re taking out the required amount, because if you don’t, you’re taxed 50% of whatever you didn’t take out that you should have. So if you do shift and do all of your giving now, you’ve freed up some cash flow from the other sources that you are doing, you’re giving from, and you’re reducing your qualified balance. And the reason that that’s important is because I think taxes are going to be higher in the future than what they are today, and you can’t beat 0%.

So you get to get that amount of money out at 0%. And then I would, you know, twelve, if you’re in the 12% tax bracket. Yeah, we’re.

Yeah, my wife’s. My wife’s the brains, their operation. She’s not here right now, but she can listen to the recording.

So what I would do is figure out how to get to the top of the 12% tax bracket, because the tax system that we’re in now expires at the end of next year. 12% is a really low rate. I think taxes are going to be higher in the future than what they are today, even if they reduce the amount of the standard deduction.

You know, that’s going to impact your, your taxes as well. So I would get as much money out of your IRA as you can up to the end of the 12% tax bracket. That’s where I would focus on, you know, doing your giving first, because your giving is not even going to count toward that, putting you closer to the end of that 12% tax bracket.

And so I would get as much income from the IRA as you can in the 12% tax bracket and then maybe look to some other sources.