Page 21 - Means Wealth 2020/2021 Perspectives

“

is 10 years younger than you, your life
expectancy factor is taken from the IRS Life is not always a matter
Joint Life Expectancy Table. of holding good cards, but
You will be taxed on RMDs as ordinary sometimes, playing a poor “
income. This means that withdrawals will hand well.
count towards your total taxable income - Jack London
for the year. They will be taxed at your
applicable individual federal income tax
rate and may also be subject to state and local taxes. If you have made non-
deductible contributions to your IRA, you must calculate your RMD based on
the total balance, but your taxable income may be reduced proportionately
for the after-tax contributions. Keep in mind that this income increase may
push you into a higher tax bracket and may impact the taxes you pay for your
Social Security or Medicare.

One way to reduce the effect of RMDs on your taxes is to consider making
a qualified charitable distribution (QCD). A QCD excludes the amount you
donate from taxable income and can be counted toward satisfying your RMD
for the year, as long as certain rules are met. You should contact your tax
advisor to see if a QCD is appropriate for your situation. n

Adapted from Fidelity’s “Required minimum distributions (RMDs)”

21