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Yahoo
01-07-2025
- Business
- Yahoo
Everything retirees need to know about RMDs: Ask Yahoo Finance
A required minimum distribution (RMD) is the minimum amount of money you must withdraw from your retirement plans annually after reaching a certain age, depending on your birth year. Yahoo Finance Senior Columnist Kerry Hannon and Yahoo Finance podcast Decoding Retirement host Robert Powell join Mind Your Money with Brad Smith to answer all of your questions about RMDs. Read more: 401(k) vs. IRA: The differences and how to choose which is right for you To watch more expert insights and analysis on the latest market action, check out more Mind Your Money here. Sign up for Mind Your Money newsletter Well, we're going to help you get retirement ready and talk about required minimum distributions known in the personal finance world as RMDs. And today, you ask the questions and ask finance everything. Ask Yahoo finance anything. We have a whip smart team to answer your RMD questions. And joining me now, we've got Yahoo finance senior columnist, Kerry Hannon. Also with us is host of Yahoo Finances Decoding Retirement video podcast, Bob Powell. Kerry, let's start with you. Just first, from all the folks writing into you, what's the thing that confuses them the most about RMDs? Yep. Uh Brad, I'd have to say, the big one is like, when do I have to take them, right? It's it's confusing for people about, you know, when this specific thing and as as we discussed, it's, you know, April 1st of the year following if you turned 73, this year it'd be next April. Um, but you can take them by December 31st this year. If you turn 73 this year, you can go ahead and take it by December 31st. That's what really trips people up. But here's the beautiful thing is, to tell you the truth, you don't really have to do this on your own, do that calculation. Generally speaking, your financial services company where your um IRA is or your 401k will do this calculation for you. And they will usually let you know by the end of December what you're going to have to pay out that following year. And you can make the decision. Do I want to automate, you know, do I want to automate it? How often do I want to take money out of the accounts? And should they go ahead and withhold the taxes for you? And most people say, yeah, go right ahead and do that. There is an exception to this, um, Brad that I like people to remember that if you are still working, um, at the employer where you're paying into that 401K plan or what have you, you don't have to take your required minimum distributions in general until you do retire. So that's one exception to this. But really that's what trips people up. So again, you know, reach out to your accountant, talk to the plan administrator where your money is and they can help you work through this. Carry, one of your readers wrote to you and asked, the stock market was up last year and so were my retirement accounts. Will my RMDs be the same or more than last year? Sorry, Charlie, they're going to be more. You know, it's the thing is, that's the point is higher returns on your investments translate to higher RMDs because we discussed that calculation. It's how big your account was at the end of December. So that's what you're going to pay for for 2025. You're going to be based on what your uh account was worth at the end of 2024. So, you know, the S&P was up, what was it? Something like 23%. So yes, indeed, they will be a bit higher, but that is translates because you did really well last year. Bob, turning to you. A topic that you're interested in is a new rule regarding RMDs when someone has multiple IRAs and wants to do a roth conversion. So, what is the new rule and how do people navigate it? Yeah. Um, it's a wonder why anyone owns an IRA, Brad, but here's the final regulation. It states that all of your IRAs are now viewed as one giant massive IRA for RMD purposes. Now, historically, you could satisfy the RMD for a specific IRA and then convert any remaining funds in that IRA into a roth, but under the new rule, all of your aggregate RMDs from all of your IRAs must be fully satisfied before any distribution from any IRA can be converted into a roth IRA. And if you convert money from an IRA before you do all that, you could be subject to a 6% excess contribution penalty on the improperly converted amount. Bob, got another one for you here because, you know, it's about the 10-year rule with IRAs. People who inherit an IRA from a parent or other relative have to empty that account within 10 years of their death. But how the money is taken out during those 10 years, it differs around whether that person had started taking RMDs. So, can you please explain these scenarios and tell viewers what they need to do? Yeah, I'll try and simplify it, Brad. So the new final regulations clarify the distribution requirements during the 10 year period. It depend on whether the original IRA owner died before or on or after what's called their required beginning date. So, if the IRA owner died before their RBD, uh the beneficiaries have do not have to take any RMDs during years one through nine, uh following the owner's death. They simply have to empty the entire account by the end of the 10th year. Now, if the IRA owner died on or after their RBD, the uh they have to take a what's called an annual stretch distribution during the years one through nine, and then take out the remaining uh balance by the end of the 10th year. So it's a little complicated uh because we've now added another acronym into the mix here. We've now, in addition to RMD, we've added RBD into the mix. So my advice would be it's best to talk to a professional if you inherit an IRA. Kerry, I got 30 seconds or less. Another one of your readers asks, can I use my RMD to make a charitable donation? What say you? Yes, indeed. If you are charitably inclined, absolutely. You need to make that. It's called a qualified charitable distribution. The money needs to go directly from your IRA or your account to that non-profit, don't come to you, go straight there. Make sure your accountant knows about, so it's not counted as income and that money doesn't get taxed. So, yeehaw, you make a big back, a big uh bang with your buck with that non-profit. And I think it's a wonderful thing. You are some limits. I think it's up to $100,000. You can do that. IRS has a few things around this, but it's really a great option for people. All right. AMAs ran, so AYFAs could sprint here. Ask Yahoo finance anything edition with Carrie and Bob. Thank you both so much answering some of those key burning questions from our viewers and readers. Appreciate it. Thanks, Brad. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Wire
27-05-2025
- Business
- Business Wire
Mutual of Omaha's "Make it Personal" Podcast Offers Unique Approach to Financial Advice
OMAHA, Neb.--(BUSINESS WIRE)--In an age of one-size-fits-all financial advice, Mutual of Omaha Advisors offers a fresh, personalized approach with its new podcast, 'Make it Personal – Your Money, Your Plan, Your Future,' and companion e-book, ' Seven Principles for Your Financial Success.' In an age of one-size-fits-all financial advice, Mutual of Omaha Advisors offers a fresh, personalized approach with its new podcast, 'Make it Personal – Your Money, Your Plan, Your Future.' Share Both resources emphasize a simple truth: personal finance should be personal. 'Financial planning isn't about following trends – it's about making decisions that work for your life,' said podcast host Mark Zagurski, Director of Advisor Strategy and Communications at Mutual of Omaha. 'Our goal is to give people actionable insights and guidance they can use for their unique situation.' Zagurski represents the expertise of nearly 1,000 Mutual of Omaha financial advisors nationwide. Through weekly episodes, the 'Make it Personal' podcast covers a variety of timely and relevant financial topics, such as understanding Social Security, minimizing retirement risks and budgeting for vacation. Listeners can tune in on YouTube, Apple Podcasts, Spotify, iHeart Podcasts and other common podcast platforms. The e-book outlines seven core principles for achieving financial success, from growing your career and understanding the difference between saving and investing to managing risk and protecting your income. Together, the podcast and e-book offer a practical, easy-to-follow guide for anyone looking to take control of their financial future. For more information, visit About Mutual of Omaha Founded in 1909, Mutual of Omaha is a highly rated, Fortune 500 organization offering a variety of insurance and financial products for individuals, businesses and groups throughout the United States. As a mutual company, Mutual of Omaha is owned by its policyholders and committed to providing outstanding service to its customers. For more information about Mutual of Omaha, visit
West Australian
25-05-2025
- Business
- West Australian
Nick Bruining: Delays to Home Equity Access Scheme applications frustrate retirees seeking extra cash
The Federal Government's popular Home Equity Access Scheme — which is similar to a reverse mortgage — has been bogged down, with many applicants reporting delays dating back to last year. Former Centrelink financial information officer-turned independent financial planner Annette Sinclair said the delays had been significant. 'While some go through reasonably quickly, the majority seem stuck in the system for at least two months — and often longer,' Mrs Sinclair said. One reader who contacted Your Money lodged a completed application in December last year. The application was cancelled because of some missing information and later resubmitted. After waiting several weeks for a response, it was discovered the insurance cover for the home came up for renewal during that period. Although renewed, it appears Centrelink had not requested proof of renewal and, therefore, rejected the application. The HEAS is a low-cost reverse mortgage arrangement which allows senior Australians to tap into their home's equity at a relatively low interest rate of 3.95 per cent. Like other reverse mortgages, only real property can be offered as security. Houseboats, mobile homes and lease-for-life retirement village arrangements are ineligible. Commercial reverse mortgage rates are typically more than double the scheme's rate, ranging between 8 and 10 per cent a year. The rate you are charged is important because unlike a conventional mortgage, you are not required to make any repayments. Instead, the interest cost is added to the loan and compounds. When the property is disposed of, the loan plus interest is repaid from the proceeds of the house sale. The higher the interest rate and the longer the loan is in place, the larger the amount that has to be repaid. Under the HEAS arrangements, people aged over 67 can access payments of up to 150 per cent of the age pension. That can be in the form of a boosted fortnightly pension payment or two lump sum amounts each year, separated by a six-month interval. That means a single could currently access up to $44,811 a year. For a couple, it's a combined $67,555. Those amounts are less any age pensions received, so a single on a full fortnightly pension could access an extra $14,937 in a year and a couple $11,259 each, or a combined $22,518. Those amounts would be greater if the person was only receiving a part-pension because of means testing. 'People accessing the lump sum amounts are often doing it for some urgent reason,' Mrs Sinclair said. 'Travelling to visit a very sick relative, or replacing something like a car. The delays in processing an application just add to the stress.' Services Australia is the department responsible for administering HEAS applications. General manager Hank Jongen apologised for the delays and revealed there were about 16,000 applications currently in the system. 'Processing times for the scheme vary because they are complex assessments,' Mr Jongen said. 'They also often require information from third parties, such as a valuation request, which can add time to claim finalisation. 'We invest significant time training staff and right now, we're training more staff on these claims to help people faster.' Mr Jongen said that anyone experiencing hardship should contact Centrelink and explain their circumstances. That can be done in person or by booking a phone appointment with a Centrelink officer. Bookings can be made via the website or the dedicated older Australians phone line on 13 23 00. Nick Bruining is an independent financial adviser and a member of the Certified Independent Financial Advisers Association
