The holiday season is upon us, a time for joy, festivities, family, and… RMDs? Yes, it's that time of year again when we start thinking about next year’s Required Minimum Distributions from retirement accounts. Like preparing the perfect Thanksgiving feast or wrapping gifts for loved ones, getting ahead of your RMDs now can save stress later.

At SoundView, we're already hard at work estimating 2025 RMDs for our clients who have their own retirement accounts (and will be at least 73 years old in 2025) or who own inherited retirement accounts. We are currently working to ensure RMDs are completed in January, aiming to avoid any potential tax complications. We'll be taking a close look at several key factors, including charitable giving, tax withholding, and the newly clarified rules for inherited accounts.

Charitable Intent

The IRS provides a way to reduce the tax impact of RMDs through Qualified Charitable Distributions (QCDs). Many of our clients take advantage of this strategy, and we have already started reviewing and updating charity lists and QCD amounts for 2025. For those who have not utilized QCDs, here is a quick primer:

• Allows those 70 ½ years of age or older to make gifts directly from their individual retirement account (IRA) to a qualified charity.
• Counts toward satisfying the RMD without being treated as taxable income.
• Often leads to net lower taxes compared to making outright cash gifts.

If you satisfy the requirements and are interested in making QCDs from your retirement account, please let your advisory team know. We can help with the details and ensure that the paperwork is ready this January to complete the QCDs and satisfy any RMDs on your retirement accounts.

Just as many use the holidays to share blessings with those in need, QCDs are a wonderful way to align your financial planning with the season’s spirit of giving.

Tax Withholding

Our tax planning process involves projecting both your current and future annual tax liability. It is possible to withhold funds from an RMD for federal and/or state income taxes, which is usually much simpler than making estimated tax payments throughout the year. Your advisor will discuss these details during your Strategic Planning meeting this fall and let you know if tax withholding from your RMD is recommended in the coming year.

Inherited Accounts

RMDs from an IRA or retirement plan will cease after death. If a spouse inherits the account, they can generally roll the inherited IRA or plan account into an IRA in their own name, which allows them to delay taking RMDs until turning 73. If a non-spouse beneficiary inherits the account, they are subject to different rules, and the requirements have become quite complex in the last several years (if you don’t believe us, check out this chart!). Rest assured, your advisory team is up to date on all the inherited account RMD rules and will help you navigate any annual requirements.

SoundView is committed to helping clients navigate the complexities of retirement account distributions and ensuring their retirement accounts remain on track.