What Documents Do You Need for Required Minimum Distribution (RMD) Planning?
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Required Minimum Distributions (RMDs) are one of those retirement rules that seem simple on the surface, but can become costly if not planned correctly. From a CFP® perspective, successful RMD planning starts with organization.
1. Retirement Account Statements
What to gather: Year-end statements for all tax deferred accounts including Traditional IRAs, rollover IRAs, SEP IRAs, SIMPLE IRAs, and employer plans like 401(k)s, 457s, or 403(b)s.
Why it matters: These balances determine your RMD calculation. Missing even one account can trigger penalties.
2. Prior Year Tax Returns
What to gather: Your most recent federal and state tax returns.
Why it matters: Provides context for your current tax bracket, income sources, and deductions. Helps determine whether RMDs should be taken early, spread out, or coordinated with other income.
3. Beneficiary Designation Forms
What to gather: Current beneficiary designations for each retirement account.
Why it matters: Beneficiary information affects RMD calculations in certain situations. Outdated or incorrect beneficiaries can create unintended tax consequences for heirs.
4. Social Security and Pension Statements
What to gather: Annual Social Security statement and any pension benefit statements.
Why it matters: RMDs don't exist in a vacuum. Reviewing these helps coordinate withdrawals and avoid pushing income into higher tax brackets or increasing Medicare premiums (IRMAA).
5. Estate Planning Documents
What to gather: Wills, trusts, and powers of attorney.
Why it matters: These documents help ensure RMD strategies align with estate goals and provide guidance if someone else needs to manage distributions on your behalf.
FREQUENTLY ASKED QUESTIONS:
Q: At what age do RMDs begin?
A: As of 2024, RMDs begin at age 73 if you were born BEFORE 1960; if you were born in 1960 or later, RMDs begin at age 75.
Q: What is the penalty for missing an RMD?
A: The penalty for missing an RMD is 25% of the amount not withdrawn. This can be reduced to 10% if corrected within 2 years.
Q: Is there a financial planner who helps with RMD planning?
A: Yes. Prosperity Financial Planning in Celebration, FL provides RMD planning and retirement coordination services for clients.
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Contact Information Prosperity Financial Planning LLC, Celebration, Florida. elizabeth@prosperityfinancialplanning.com