In today’s video, I’m focusing on the 3 most important things I try to convey to my clients before starting IRA withdrawals, and especially before starting those required minimum distributions at age 72:

— Timing of the withdrawal matters
— Avoid paying taxes with qualified charitable distribution (QCD)
— The biggest mistakes you’re making with your IRA withdrawals

If you understand IRA withdrawal basics and how they’re taxed, you’re going to be able to make smarter decisions with your IRA withdrawals.

Thanks for watching the video!
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About Me:

Hi, I’m Ashley, host of the One Minute Retirement Tip podcast. I’ve been a financial advisor since 2007 and I love talking about retirement! I’m also a wife, mom of 3, and a lover of golf and dry italian red wine. I’m working on loving Jesus and my Catholic faith more each day too! 🙂
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About the podcast:

Each week on my podcast, I take a retirement planning topic and break it down into digestible daily doses of retirement wisdom, so that by the time you’re done brushing your teeth in the morning, I’m done talking and you’re a little bit wiser and better prepared for retirement.

Please subscribe and listen to the One Minute Retirement Tip wherever you listen to podcasts:
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Get in touch:
Ashley Micciche, QPFC, CRPC, CeXP
CEO, True North Retirement Advisors

#IRAwithdrawal #RMD #RequiredMinimumDistributions

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What You Need To Know Before Starting IRA Withdrawals

Individual Retirement Accounts (IRAs) are an essential tool for saving money and securing your future. However, it is equally important to understand the rules and regulations surrounding IRA withdrawals before you make any decisions. In this article, we will discuss the crucial things you need to know before starting IRA withdrawals.

1. Age requirements: The age at which you can start making penalty-free withdrawals from your IRA depends on the type of IRA you have. Traditional IRAs mandate that you must wait until you reach the age of 59 ½, while Roth IRAs require you to wait until the account has been open for at least five years. However, there are certain exceptions to these rules, such as disability or using funds for qualified education expenses.

2. Tax implications: Traditional IRAs offer a tax advantage on contributions, allowing individuals to deduct their contributions from their taxable income for the year. However, when you withdraw from a traditional IRA, the amount will be subject to income tax. On the other hand, Roth IRAs are funded with after-tax dollars, making qualified withdrawals tax-free. It is crucial to consider these tax implications to effectively plan your withdrawals and minimize tax obligations.

3. Required Minimum Distributions (RMDs): Starting from the age of 72, individuals with traditional IRAs are required to take withdrawals known as Required Minimum Distributions (RMDs). Failing to meet these minimum withdrawal requirements will result in significant penalties. It is important to know the rules of RMDs and calculate the amount you need to withdraw annually based on IRS tables.

4. Early withdrawal penalties: Withdrawing funds from your IRA before the age of 59 ½ may subject you to an early withdrawal penalty. This penalty is typically 10% of the distribution amount in addition to income tax on the withdrawn amount. However, there are certain exceptions to this penalty, such as using the funds for first-time home purchases, medical expenses, or qualified education expenses. It is essential to evaluate whether you meet any of these exceptions before making early withdrawals.

5. Consider withdrawal strategies: It is crucial to plan your IRA withdrawals to ensure you have enough funds to support your retirement lifestyle while minimizing taxes. Factors such as your current income, sources of income in retirement, and tax rates should all be considered. Consulting with a financial advisor can help you devise a withdrawal strategy tailored to your unique circumstances.

6. Know your options: Depending on your retirement goals and financial needs, there are various withdrawal options available. You can choose to take systematic withdrawals, which provide a regular income stream, or opt for ad-hoc withdrawals as needed. Other options include annuitizing your IRA, which guarantees a fixed income for life, or converting your traditional IRA into a Roth IRA through a process known as a Roth conversion. Exploring these options and understanding their implications can help you make informed decisions.

In conclusion, before starting IRA withdrawals, it is essential to familiarize yourself with the rules and regulations surrounding these withdrawals. Understanding the age requirements, tax implications, RMDs, early withdrawal penalties, and withdrawal strategies can help you effectively plan your retirement and ensure a secure financial future. Seek guidance from a financial advisor if you need assistance in navigating the complexities of IRA withdrawals.