Will Your RMD Plan Survive the December Rush?

December has a way of arriving faster than expected.

One minute, you are making summer plans.

The next, you are juggling holiday schedules, family commitments, travel, year-end paperwork—and a Required Minimum Distribution that still needs your attention.

Most annual RMDs must be completed by December 31. Although someone taking a first RMD may be permitted to delay it until April 1 of the following year, doing so can result in two taxable RMDs falling within that same calendar year.

That is why an RMD plan should begin well before the final weeks of the year.

Start With the Accounts You Own

Before deciding how to take your RMD, make sure you know which retirement accounts are involved.

If you own more than one traditional IRA, the RMD must generally be calculated for each account, although the total may usually be withdrawn from one IRA or divided among several IRAs.

Employer plans are different. RMDs from plans such as 401(k)s and 457(b)s generally must be calculated and taken separately from each plan account.

This is one of those details that can create an expensive mistake when someone assumes all retirement accounts follow the same rules.

Make Your Charitable Decisions First

If you plan to use a Qualified Charitable Distribution, address that before withdrawing the rest of your RMD.

An eligible QCD can satisfy part or all of an IRA owner’s RMD, but the distribution must be handled correctly and sent directly from the IRA to an eligible charity. The IRA owner must also be at least age 70½ when the distribution is made.

Completing this step earlier gives you time to:

• Confirm that the organization is eligible

• Submit the proper instructions to your custodian

• Verify that the charity received the funds

• Keep the acknowledgment and other documentation needed for tax reporting

Decide What Happens With the Rest

Once charitable giving has been addressed, decide how you want to satisfy the remaining amount.

Do you need the money for living expenses?

Would you prefer to transfer investments in kind?

Does the distribution create an opportunity to rebalance your portfolio?

There is no single answer that fits everyone. The important part is making the decision intentionally rather than automatically selling investments or waiting until the deadline forces your hand.

Review Tax Withholding Before You Finish

Your distribution amount is only part of the decision.

You also need to consider whether federal or state taxes should be withheld.

Your appropriate withholding will depend on the rest of your financial picture, including income from Social Security, pensions, investments, work, and other sources.

Reviewing it before completing the distribution gives your financial and tax professionals time to help identify a potential gap instead of discovering it when your return is prepared.

Watch for These Year-End Mistakes

Before considering your RMD complete, check for these common problems:

Assuming every account can be combined

Traditional IRAs and employer plans do not necessarily follow the same aggregation rules.

Treating a couple’s RMDs as one obligation

Retirement accounts are individually owned. Each spouse must satisfy the RMD associated with accounts held in that spouse’s name.

Taking the distribution before planning a QCD

Once money has already been distributed to you, it cannot simply be relabeled as a Qualified Charitable Distribution afterward. A QCD must be made directly from the IRA to the eligible charity.

Waiting until the final days of December

Even when you know exactly what you want to do, custodial forms, charity processing, account transfers, and holiday schedules can take time.

Starting early gives you room to correct mistakes before the deadline arrives.

A Simple RMD Planning Sequence

You do not have to solve every decision at once.

Work through them in this order:

1. Inventory your retirement accounts.

Confirm what you own and which accounts require separate action.

2. Estimate your total RMD.

Use the prior year-end account balances and the appropriate IRS life-expectancy factor.

3. Make charitable decisions first.

Determine whether a QCD belongs in your plan before taking other IRA distributions.

4. Choose cash, investments, or a combination.

Decide how you want to receive the remaining distribution.

5. Finalize your withholding.

Coordinate your federal and state tax decisions with the rest of your income picture.

6. Confirm everything was completed.

Keep transaction confirmations, charity acknowledgments, and other records with your tax documents.

A Little Planning Now Can Make December Easier

Required Minimum Distributions do not have to become another source of year-end stress.

The earlier you organize your accounts and understand your options, the more time you have to make thoughtful decisions—and the less likely you are to find yourself racing against the calendar.

Build Your RMD Plan Before the Year-End Rush

After completing the workbook, you may also schedule a complimentary RMD Action Plan Session with John Boyer and the Wisdom Financial Planning team for help reviewing your next steps.

Wisdom Financial is a DBA of John Boyer, Inc.  Fee‐based advisory services offered through John Boyer, Inc, a Registered Investment Advisor. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP® in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.