Jonathan Rase

Weekend Reading: What to Know About Required Minimum Distributions (RMDs)

Required Minimum Distributions are one of the biggest tax drivers in retirement, and understanding them early can help you avoid surprises later. Here’s a simple breakdown of what they are, when they start, and what you can do now to reduce the tax impact down the road.

When RMDs Start

Most retirees today begin RMDs at age 73. Those born in 1960 or later will begin at age 75.
Your first RMD must be taken by April 1 of the year after you reach your RMD age. Delaying that first one can cause you to take two RMDs in the same year, which may increase your taxes.

What RMDs Apply To

RMDs apply to pre tax retirement accounts, including: • Traditional IRA • SEP IRA • SIMPLE IRA • 401(k), 403(b), 457(b) • Old employer plans you still have sitting out there
RMDs do not apply to: • Roth IRAs during your lifetime • Taxable brokerage accounts • Non qualified annuities (they have their own rules)

Why RMDs Matter

RMDs count as taxable income. Large RMDs can: • Push you into a higher tax bracket • Increase the taxation of Social Security • Trigger Medicare IRMAA surcharges • Reduce flexibility in later life planning

If your retirement plan shows you’ll be forced to take out more than you need, planning ahead can make a meaningful difference.

Strategies to Reduce Future RMDs

1. Roth Conversions Before RMD Age
Converting a portion of pre tax assets to Roth can lower future RMDs, create tax free income later, and help manage Medicare and Social Security taxation. Many retirees convert just enough each year to fill up a lower tax bracket.

2. Strategic Withdrawals in the “Gap Years”
The years between retirement and RMD age are often a low tax window. Taking controlled withdrawals early can reduce the size of future RMDs and smooth out lifetime taxes.

3. Qualified Charitable Distributions (QCDs)
Starting at age 70½, you can send up to $100,000 per year directly from an IRA to charity. This counts toward your RMD but does not show up as taxable income.

4. Consolidating Old Employer Plans
Multiple old 401(k)s can create unnecessary complexity. Consolidating accounts can simplify
RMD calculations and improve tax planning.

5. Coordinating Withdrawals With Social Security
Delaying Social Security can create more room for Roth conversions or strategic withdrawals early in retirement, reducing future RMD pressure.

The Bottom Line

RMDs are required, but tax surprises don’t have to be. A thoughtful plan can turn RMDs into a manageable part of your retirement income strategy rather than a tax burden.

Weekend Reading: If you or someone in your family is still in school—or heading back in the fall—now is the time to make sure your FAFSA form is in.

A few things worth knowing:
⏰ The federal deadline is June 30. State and school deadlines are often earlier.
⏰ Many types of aid are first-come, first-served. Waiting could cost money.
⏰ You can make corrections after submission, but the form needs to be in first.

Don't let a deadline get in the way of money that's already available to you.

Weekend Reading: A callback to a former post but relevant given the transition into spring and spending more time outside. This weekend its "Why Rebalancing Your Portfolio Matters (Using the Garden Analogy DIY Investors Love)".

If you’ve been investing on your own the past few years, you’ve probably seen certain parts of your portfolio grow much faster than others. Tech, AI, and a few high‑growth sectors have taken off — which feels great on paper.

But here’s the problem:
When one part of your portfolio grows too fast, it can quietly take over more space than you ever intended.

And that’s where the garden analogy comes in.

Think of your portfolio like a garden.
You plant a mix of things — some grow quickly, some slowly, some provide stability, some provide color. But if you never check on it, one plant can start taking over the entire space.

Rebalancing is the process of trimming back the plants that grew too fast and giving the rest of the garden room to breathe again.

Here’s why that matters:

1. It keeps your risk level where you intended it to be
If tech or AI stocks were originally 20% of your portfolio but have grown to 40% or more, you’re now taking on double the risk you planned for. Rebalancing trims that back to the level you’re comfortable with.

2. It prevents one sector from dominating your future
When one plant takes over the garden, everything else gets crowded out. The same happens in a portfolio. Rebalancing keeps things diversified so you’re not relying on one sector to carry your entire retirement.

3. It forces you to “sell high and buy low” automatically
Rebalancing means trimming the parts that have grown the most and adding to the areas that haven’t. It’s a disciplined way to avoid chasing performance and instead stick to a long‑term strategy.

4. It protects you from surprises
The last 3 years have been great for certain sectors — but that doesn’t mean the next 3 will look the same. Rebalancing helps protect you if leadership shifts to different parts of the market.

Bottom line:
A garden that’s never tended eventually becomes overgrown.
A portfolio that’s never rebalanced eventually becomes overexposed.

If you’re a DIY investor, especially heading into or already in retirement, this is one of the most important habits you can build. It keeps your risk in check, your plan on track, and your future more predictable.