Required minimum distributions are usually due by the end of the year. It would seem appropriate to wait as long as possible in the year before taking the distribution. This would maximize the tax deferred build up. Of course, that assumes positive growth of the account.

The RMD calculation is based on the IRA or IRAs’ valuation on Dec. 31 of the previous year. So, unfortunately, one may have to take a distribution during a down time in the market, but the RMD amount is based on the Dec. 31 valuation. This definitely is a negative consequence for waiting until later in the year with a down trending market.

If we consider the event of our death before taking our RMD for the year, we need to consider how that might affect the IRA beneficiaries. If the RMD has not been taken before death, then the beneficiaries must take the RMD in their names--Not the Estate. The later in the year death occurs, the more problematic the situation. There may be very little time for the beneficiaries to get things organized.

If they miss the end of year mandatory distribution, they will probably have to deal with the 50 percent penalty. It is possible this can be rectified, but not without some discomfort.

Taking the RMD early in the year makes sense. It eliminates the problems for the beneficiaries. They can now wait until the end of the following year before taking an RMD from the inherited IRA. By taking it early, the December 31 value and the market value at RMD should be very close. If the market is up, then gains would be utilized for the RMD requirement. If the market is low, (the IRA valuation would be low) requiring a smaller RMD.

If the RMD funds are not needed for income, they can be reinvested into the market or other programs for additional potential growth.

Just something to consider. Contact us today for more information!

August H. Velten, CLU, is a Space Coast resident and guest columnist, who has served as a financial planner for the past 40 years. He is the president of August H. Velten CLU & Associates Inc., and serves as an instructor with Adult Financial Education Services. Feel free to contact him at or (321) 622-5418.

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