★ “It is not what you make, but what you get to keep that matters.” 

Required Minimum Distribution (RMD) Optimization

Many people don’t believe that you can do a joint life on an IRA, but you can! You can do joint life with your spouse, or your kids or with your golfing buddy. For our current example, the husband picked the wife. How many years in a row, under the current assumptions, does the lifetime income annuity pay more than the RMD? Every single year. It’s an overall win: You get more during your best ten years and the income is predictable and dependable.

While most people love this concept, some will hesitate over the tax issue. We usually hear something like this: “I don’t even like getting that RMD money because I have to pay taxes and I hate paying taxes. All you’re doing is sending me more money. That just means I have to pay more taxes, and I just told you how much I hate to pay taxes!”

When you take your RMD, where do you pay your taxes from? From your RMD, and you’re left with an amount less than your RMD. But you don’t have to do that anymore. There are opportunities for you get more money so that you are still left with more after taxes than what you would with an RMD. In effect, you are using the longevity credits to pay the taxes.

We am not arguing that taxes don’t matter. It is where you can get the most amount of money after taxes that really counts. Even if it didn’t pay more, the stability and predictability of income from a lifetime income annuity makes it more desirable for a retiree.

Marilyn M. Miller is a registered investment advisor, dba Federal Benefits Advisors, in the State of Washington. This advisor may not transact business in states, where it is not appropriately registered, excluded or exempted from registration. Individualized responses to persons that involve either the effecting of transaction in securities, or the rendering of personalized investment advice for compensation, will not be made without registration or exemption.

Marilyn M. Miller is a registered investment advisor, dba Federal Benefits Advisors is not affiliated with or endorsed by the U.S. Government, the U.S. Armed Forces, any of the federal benefit programs, the State of Washington, any Washington State Agency, or any of the Washington state benefit programs. Marilyn M. Miller, Registered Investment Advisor dba Federal Benefits Advisors nor its representatives do not provide legal or tax advice.