Required to Take a Distribution? Now What?

If you’re age 70½ or older, you’ve probably heard of the required minimum distribution (RMD) for retirement accounts. As a rule, you’re generally required to withdraw a certain amount from your retirement account beginning the year you turn age 70½ and every year thereafter.

If you’d like more information on the requirements or help in calculating your RMD, be sure to get in touch with your financial advisor before year-end. But when it comes to the withdrawal itself, you can:

1. Keep it - Consider reinvesting your RMD funds into another account (such as a taxable account) or perhaps a mutual fund or an annuity. Or if you think you’ll need the money in the near future, you could put it in a checking or money market account for easy access.
2. Gift it - Do you have a grandchild headed for college someday? You could put some RMD funds toward his or her college savings. Or perhaps you’d like to donate to your favorite charity or help a loved one save for his or her retirement.
3. Use it to create a legacy - If you’re interested in leaving money to your heirs, consider using your RMD funds to pay the premium on a life insurance policy that can benefit them later. Your financial advisor can help you decide which type of policy fits your needs.

Before you decide what to do with your RMD funds, talk with your financial advisor. He or she knows your entire financial picture and can help you determine which option is right for you.