Phillip Cannella News: Phil Cannella Answers the Question “What If I don’t Need my RMD?”

Phil Cannella – Phillip Cannella News: Phil Cannella has had to answer this question many times. People in their retired years hit 70 ½ and are made aware that this is the time they need to begin taking their retired minimum distributions yet they don’t need those funds and would rather have them continue to grow tax-free. Phil Cannella explains that it just doesn’t work that way. Most monies in retirement accounts have gone in them tax-free, meaning the taxes are being deferred to a later date and the IRS wants to collect that.

This is an issue many of us have and for which there is no happy answer unfortunately. As Phil Cannella puts it: “What if you don’t need the RMD? You may be doing fine with your present income and prefer to push those withdrawals back until you need the additional income.  But the IRS doesn’t want to wait and it’s going to try to collect as much money as it can, first by taxing you when the RMD is withdrawn, then forcing you to report the withdrawals as income.  And if the additional income bumps you into a higher tax bracket, then you’ll just have to pay more.”

Phil Cannella however insists that there is a way to bypass this but it also boils down to a choice each consumer has to make once they are educated so that they can make an informed decision. And that choice by the way does not include ignoring the RMD and hence getting a penalty. Phil Cannella answers this question in his book, Crash Proof Retirement, The Planning Isn’t Over.