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Shrink Your RMDs in 2021 and Beyond

September 14, 2020

From the Kiplinger website

People who don’t need income from their IRA, SEP and/or 401(k) are benefiting from this year’s waiver of required minimum distributions (RMDs). They’re reducing income taxes and preserving their plan assets.

But RMDs will return in 2021. Since retirees will be a year older than when they last took their RMDs, they’ll have to take out a slightly higher percentage from their retirement plans.

There’s one little-known way to reduce “RMD shock” in 2021 and beyond. That’s by placing some of your funds in a qualified longevity annuity contract.  A QLAC is a type of deferred income annuity designed to meet IRS requirements.  The money in a QLAC is excluded from assets on which future RMDs are calculated.

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