MRD Deferrals

Submitted by Joseph Cook on Tue, 2016-08-02 19:26

I recently read that is is possible to defer a clients MRD?

Is there anyway possible to do this as funds are not needed, tax not wanted?

Thank you,

Joe Cook, MBA, CFP

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Permalink Submitted by Joseph Cook on Tue, 2016-08-02 19:27

Can MRD’s be deferred in any way? If so howdo I learn about it. Thanks

Permalink Submitted by Alan - IRA critic on Tue, 2016-08-02 21:37

No major deferrals are permitted. The first year RMD can be deferred to 4/1 of the second year, but that only results in two taxable RMDs due in that second year. Other than that, a client might convert amounts to a Roth IRA in excess of his RMD, and that will reduce all future RMDs be reducing the TIRA balance. But basically, there is no way to avoid RMDs without taking out additional taxable distributions and paying taxes sooner.

Permalink Submitted by Ben Meyer on Wed, 2016-08-03 13:40

New regulations also permit IRA funds to be invested in a Qualified Longevity Annuity Contract (QLAC). However, the tradeoffs to determine if a QLAC may be beneficial are quite stringent. You will need to survive to age 85 to even begin QLAC distributions, and to mid-90s to break even. The QLAC contribution is limited to the lesser of $125k or 25% of your IRA. The death benefit, if elected, will be limited to return of premium. But a QLAC is an alternative. Another alternative to defer income is to delay receiving Social Security until age 70, if that is an option for you.