Retirement Savings and Benefits
Questions and comments about IRAs, 401k accounts, social security, and other forms of retirement savings and benefits.
Delay/Push back RMD
Posted by: b1_lee, March 15, 2017 03:00PM
Understand one can delay 401k RMD when still working, but What options are available to those not working?

Some articles claim charitable contribution/Muni/529 can. I don't understand because one still take RMD from 401k and/or traditional IRA to avoid 50% penalty. Earning for these might be tax free, but distribution will count as ordinary income.

Are there legal ways one can delay/push back RMD after reaching 70.5?

Re: Delay/Push back RMD
Posted by: Alan S., March 15, 2017 05:42PM
No, there is no viable escape from RMDs. Sure, a QCD could be done to eliminate the tax, but then the RMD proceeds are gone. The IRA could be converted to eliminate future RMDs, but the entire IRA would be taxed up front for the conversion taxes.

A person could get another job with a 401k plan that accepts IRA rollovers and/or 401k rollovers from prior plans, and that would defer the RMDs on these values until the next retirement. This is probably the best option but obviously the person must be working to do this. Starting a business with a solo K plan will not work because 5% owners must start RMDs at 70.5.

Another option for a partial delay is to purchase a QLAC (qualified longevity annuity contract) from an insurance company IRA custodian. These are limited to 125k but no more than 25% of total IRA value. The premium paid is exempt from RMD calculation until the annuity begins payout at age 85 or so. So this will defer RMDs for several years, but on no more than 25% of IRA value.


The RMD schedule starts out with about 3.7% of the account value being distributed but that % gradually rises and really accelerates starting in the middle 80s. Deferral of RMDs would therefore result in much higher RMDs later on that would probably result in paying a higher marginal tax rate once those higher RMDs begin. Same for a QLAC starting at 85.

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