Dear Liz: I\u2019m confused about required minimum distributions from my retirement accounts. I\u2019d like to avoid taxes on my withdrawals, but it seems there is no way to avoid them. Please give me some guidance.<\/p>\n
Answer: If you got a deduction for contributing this money, and you want to keep the funds you\u2019re required to withdraw, then yes, you have to pay taxes on these distributions.<\/p>\n
Required minimum distributions from retirement accounts currently have to start at age 73. There are a few exceptions. Roth accounts don\u2019t offer deductions on contributions and also don\u2019t have RMDs. You can postpone RMDs from a workplace plan such as a 401(k) or 403(b) as long as you\u2019re still working for the employer that sponsors the plan, the plan offers this \u201cstill working\u201d option, and you don\u2019t own 5% or more of the company.<\/p>\n
If you don\u2019t need the money, you could consider donating your required minimum distribution to charity. Known as \u201cqualified charitable distributions,\u201d these donations can start as early as age 70\u00bd. As long as the money goes directly from an IRA to a qualified nonprofit, you can avoid paying taxes on the distribution. For 2025, the maximum qualified charitable distribution is $108,000 per individual. (You can\u2019t make a qualified charitable distribution from a workplace plan, but you can roll some or all of the account into an IRA and make the donation from there.)<\/p>\n
Sometimes RMDs can be large enough to catapult savers into a higher tax bracket and trigger higher Medicare premiums. If that\u2019s the case, and you\u2019re still a few years away from starting RMDs, consider talking to a tax pro about ways to manage the tax bill. Starting distributions early or converting some funds to a Roth IRA might be options.<\/p>\n
Liz Weston, Certified Financial Planner, is a personal finance columnist for NerdWallet.<\/a> <\/a>Questions may be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the \u201cContact\u201d form at asklizweston.com.<\/a><\/p>\n If you purchase a product or register for an account through a link on our site, we may receive compensation. By using this site, you consent to our User Agreement<\/a> and agree that your clicks, interactions, and personal information may be collected, recorded, and\/or stored by us and social media and other third-party partners in accordance with our Privacy Policy.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Dear Liz: I\u2019m confused about required minimum distributions from my retirement accounts. I\u2019d like to avoid taxes on…\n","protected":false},"author":2,"featured_media":89134,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[138,246,111,139,69,244,245],"class_list":{"0":"post-89133","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-finance","10":"tag-new-zealand","11":"tag-newzealand","12":"tag-nz","13":"tag-personal-finance","14":"tag-personalfinance"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/89133","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=89133"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/89133\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/89134"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=89133"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=89133"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=89133"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}