Page 35 - Investment Advisor January/February 2022

RMD Planning for

2022 and Beyond

A client’s tax situation and whether or not they need

money from the RMDs are key factors to consider.

BY ROGER WOHLNER

s we enter 2022, it’s important that clients have taken IRA and direct it to qualified charitable organizations. The ben-
their full required minimum distributions (RMDs) for efit is that QCDs are not taxed. As far as RMD planning goes:
A 2021. As advisors know, there is a 50% penalty on any • QCDs taken prior to age 72 will reduce the amount in the
RMD amount not taken by the deadline. Beyond just manag- traditional IRA that is subject to future RMDs.
ing RMDs, there are a number of planning issues surrounding • QCDs taken in excess of a client’s RMD amount on or after
them — not only for clients who must take them, but also for age 72 will serve to reduce the amount of future RMDs.
younger clients as they approach age 72. • Using QCDs for some or all of a client’s RMD will reduce
Much of this planning centers on: the amount of the RMD that is taxable, while accomplish-
• Your client’s current and anticipated future income and ing the client’s charitable giving goals.
tax brackets. QCDs are an excellent tool for those who are eligible and
• Whether your client needs the money from the RMDs. who are charitably inclined. For clients in this situation who
For many clients, steps can be taken in future years to can’t itemize deductions, QCDs can be a tax-efficient method
reduce their RMD obligations from traditional IRAs and other of making charitable donations while at a minimum reducing
retirement accounts, if this makes sense from an overall plan- the tax bite of their RMDs.
ning perspective.
Roth Conversions
Qualified Charitable Distributions Roth IRAs and Roth conversions have been hot topics lately.
Qualified charitable distributions, or QCDs, allow those who are A Roth IRA conversion can be a solid overall planning tool,
at least age 70½ to take up to $100,000 from their traditional including as a vehicle to manage and reduce future RMDs.

JANUARY/FEBRUARY 2022 INVESTMENT ADVISOR 33