Skip to main content
First Tech Routing #321180379

7 RMD Strategies During Time of Market Turbulence

When markets are down, what options do you have for RMDs?

As an investor, you’re obligated by the IRS to take required minimum distributions (RMDs) from most retirement accounts to avoid indefinitely deferring tax liabilities. But, if timing isn’t favorable, a quick market downturn at the start of the year can make taking RMDs stressful.

Explore some of the strategies you can deploy when considering RMDs amid turbulent market conditions, and speak to your financial advisor for more information.

Seven strategies:

 

1. If this is your first RMD, you can delay. Usually, RMDs must be taken by December 31; however, your first RMD can be delayed until April 1 the following year. Flexibility around timing may be favorable if market conditions improve before you withdraw, but it’s also crucial to think through any tax implications of delaying.

 

2. If you’re still working, you might be able to delay. After you’ve reached the relevant RMD age, you may have the option to defer taking the RMD from your current employer’s retirement account. The IRS typically allows your first RMD from a current employer’s retirement plan to be taken by April 1 the year after you retire, however a company retirement plan has to allow for this exception, so check with the plan administrator.

 

3. Different types of accounts have different rules of play. Withdrawing from one or more IRAs works differently than 401(k) plans. Your financial advisor can help you identify where you have flexibility to withdraw and where you don’t.

 

4. If available, use cash. Otherwise, sell with purpose. To satisfy the RMD, simply request cash out of your account rather than sell investments at reduced values. Alternatively, discuss with your financial advisor which assets, including stocks and bonds, make most sense to sell to satisfy the RMD.

 

5. QCDs are an option if you have charitable intentions. If you have a cause close to your heart, you can make a qualified charitable distribution (QCD). This approach allows you to donate up to $100,000 to charity from your IRA and have it count toward your RMD, which should help come tax time.

 

6. If income isn’t the priority, you can consider an in-kind distribution. Like QCDs, an in-kind distribution is another option if you don’t require cash flow. While this strategy doesn’t avoid taxes, it can help reduce transaction costs by transferring securities in your IRA to your after-tax brokerage account. Bear in mind that an in-kind IRA distribution will reset the cost basis of your holding.

 

7. Reinvest. Reinvesting your RMD into an after-tax brokerage account could be advantageous when the markets eventually start to recover.

 

Everyone’s situation is unique, which means no one RMD strategy amid volatility will work for all. Think through each with the help of a knowledgeable advisor and your tax professional.

RMDs are generally subject to federal income tax and may be subject to state taxes. Raymond James does not provide tax advice. Please discuss these matters with your tax professional.

Sources: raymondjames.com/commentary-and-insightsIRS RMD FAQ

Raymond James corporate
Privacy Notice │ BrokerCheck®

Suggested Articles

Image for FIRE Up Your Retirement Approach FIRE Up Your Retirement Approach
Financial Independence Retire Early (FIRE) is a movement that encourages extreme savings as a way for people to stop working decades earlier than the typical retirement age. 
Simply put, financial independence means having enough money saved and invested that you don't need to work to cover your everyday expenses. Your savings and passive income streams give you the freedom to retire early and spend your time on other 
 
August 13, 2024
Financial Planning
Markets & Investing
Retirement and Longevity
Budgeting
Image for Unpacking the Psychology of Loss Aversion Unpacking the Psychology of Loss Aversion
It’s natural to avoid loss, but sitting on the sidelines out of fear might lead to missed financial goals.
June 27, 2023
Markets & Investing
Investments
Image for How to Navigate Inflation While in Retirement How to Navigate Inflation While in Retirement
Top strategies for planning for an responding to inflation during retirement.
June 06, 2023
Retirement and Longevity
Investments

Financial Advisors offer securities through Raymond James Financial Services, Inc. Member FINRA/SIPC and securities are not insured by credit union insurance, the NCUA or any other government agency, are not deposits or obligations of the credit union, are not guaranteed by the credit union, and are subject to risks, including the possible loss of principal. First Tech Federal Credit Union and Addison Avenue Investment Services are not registered broker/dealers and are independent of Raymond James Financial Services. Investment advisory services offered through Raymond James Financial Services Advisors, Inc.

 

Raymond James Financial Advisors may only conduct business with residents of the states and/or jurisdictions for which they are properly registered. Therefore, a response to a request for information may be delayed. Please note that not all of the investments and services mentioned are available in every state. Investors outside of the United States are subject to securities and tax regulations within their applicable jurisdictions that are not addressed on this site. Contact your local Raymond James office for information and availability.

 

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.