KeithS01
Expert Alumni

Get your taxes done using TurboTax

Hi, Steve.

You do have several years, as the new age for RMDs is 72. In the year you turn 72, you will be required to take out about 3.65% of the previous year's December 31 balance. That will simply add to your income, so how much of an impact depends on how big that RMD is and how big your other income is.

To minimize the impact at that time, you could convert the money to a Roth IRA now, thus eliminating the need for RMDs. Of course, that comes with a cost, in that you will have pay taxes now on whatever you convert.

Another option is the Qualified Charitable Distribution (QCD). Once you turn 70.5, you can ask your custodian to send money from your IRA directly to a charity (or charities) of your choice. These distributions count towards your RMD (once you turn 72), but are not included in your income. (They are also not deductible as charitable contributions, but especially with the expanded Standard Deduction, I don't find that to be an issue for most retirees; they weren't going to be able to deduct it anyway.)

Also, starting to take it now would (theoretically) decrease the amount of RMDs, because it would reduce the balance. That being said, I know people who have been taking RMDs for 9 years, and their IRA balance is now higher than it was then.

Hope that gives you some ideas.

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