Financial
BETTER LATE THAN NEVER
FOCUS
Did COVID Postpone Your Retirement?
Y
our retirement picture is as unique as your fingerprint. With a variety of investment strategies, savings plans, and retirement planning methods, there are many ways to peel retirement’s onion. That variety can itself present challenges. Your retirement date is mostly your prerogative. But deciding when you’ll retire greatly affects how you will retire. If you decide to retire late, keep the following important financial considerations in mind while making your retirement plan.
Required Minimum Distributions (RMDs)
by B. Craig Ivy, CFP®
Wealth Advisor, Linscomb & Williams
22 | Mv | November + December 2021
Pre-tax retirement accounts enable you to deduct new contributions every year, up to a certain limit. Accounts like Traditional IRAs, SEP IRAs, and pretax 401(k)s give you the opportunity to potentially reduce your taxable income annually, while investing for the future. The time will eventually come, however, when the pre-tax accounts
must become after tax. This takes place through Required Minimum Distributions (RMDs), starting in the year during which you turn 72. Accountholders are required to make an annual withdrawal which is calculated based on the balance of their accounts and which considers their ages. Since withdrawals from pretax retirement accounts are considered income by the IRS, RMDs are taxable events, and must continue until your pretax account balance is zero or you pass away. Until recently, you could not make additional contributions to your pre-tax IRA beyond age 70 1/2. Thanks to recent updates in the law, if you work past your RMD starting date (now age 72), you can continue contributing to your IRA.
