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Need to Withdraw From an IRA Before Turning 70 1/2 Years Old? This Weeks Q&A Mailbag and More.

This week’s Slott Report Mailbag looks into RMDs, QCDs, and IRA withdrawals prior to turning 70 1/2 years old. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure.

Question: Hello. I am wondering if you could answer a “simple” question. I have a client that needs an RMD. His RMD is $15,000. He is a wealthy person, and wishes to make a QCD of $50K. Can we take a $50K IRA Distribution, and donate the entire amount as a QCD? My inclination is the RMD is a MINIMUM distribution, does not mean that you cannot take more and give it away? Thanks – Jim

Answer: Qualified Charitable Distributions (QCDs) were brought back and made permanent by Congress in 2015. A QCD is a tax-free direct transfer of up to $100,000 in IRA funds annually to a qualified charity. QCDs are a great tool for charitably-inclined IRA owners. Here is some good news for your client. While a QCD can satisfy his required minimum distribution (RMD), he is not limited to the RMD amount. He can do a $50,000 QCD even though his RMD is only $15,000.

Question: Hello, I am 67 years old. Can I take money out of an IRA now, but not again until 70-1/2 when RMD starts? Thank you!

Answer: Your IRA funds are yours to access at any time. There are no restrictions on withdrawals. At age 67, you are in what is sometime referred to as the “sweet spot” for IRA distribution planning. Between ages 59 ½ and 70 ½ you have complete flexibility when it comes to your IRA. Because you are over age 59 ½ you will not be subject to the 10% early distribution penalty if you decide to withdraw funds. However, if you do not need the money you are not required to take distributions as you will be when you reach age 70 ½.