Required Minimum Distributions — Video

What this episode covers

Required minimum distributions are evidence the government has a dark sense of humor. At 70.5 years old they force us into a race between two events. What happens first — do we die, or run outa money? Download Audio   Transcript:   Self-directed IRA and 401k distributions, specifically what’s referred to as RMD’s, required minimum distributions. Unless one has a Roth IRA, any IRA or any other 401k plan has a required minimum distribution. In simple terms, once you reach age 70 1/2, the IRS is going to require you, even if you don’t need the money, even if you don’t want to take the money, the IRS is going to require you to take out those RMD’s, because they’re going to want to get paid their share of the taxes that they previously did not tax you on. So, what’s critical to keep in mind, especially with a self-directed plan, is it doesn’t matter what assets you have within the plan. If you had a million dollars in your plan, and 900,000 was tied up in real estate and you say, I can’t pay RMD’s because it’s not cash. Guess what? The IRS doesn’t care, and that’s in very simple terms. They just don’t care. At age 70 1/2 you have to take out those distributions. You have to make sure that you have funds available from somewhere to pay that RMD tax. Again, even if all the assets of your plan are tied up in non-traditional assets such as real estate.

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