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However, once Required Minimum Distributions (RMDs) begin, the IRS wants its share.
Heres the one thing you cant do with your RMDs in retirement andsmarter strategies to achieve long-term benefits.
Its a common misunderstanding and one that can complicate tax planning if not addressed early.
Allowing conversions of RMDs would let taxpayers bypass the very tax the IRS requires them to pay in retirement.
By then youve lost most of your flexibility, Flaten said.
Smart Moves for Retirees
Even retirees who are already subject to RMDs still have meaningful tax-planning opportunities.
A QCD allows retirees to send up to $108,000 annually directly from their IRA to a qualified charity.
The amount counts toward their RMD but is excluded from their taxable income.
For clients who are already charitably inclined, this can be a game changer, Flaten said.
The QCD bypasses that issue altogether.
The smartest move of all is early planning.
The earlier you start planning, the more choices youll have, Flaten said.
RMDs arent inherently bad, but without a strategy, they can feel punitive.
The mistake is waiting too long to act.
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