The IRA Offset Strategy Helps To Reduce Or Eliminate The Excessive Taxes Caused By Your Required Minimum Distribution

Is your Required Minimum Distribution (RMD) from your IRA increasing your income taxes?

As IRA/Qualified Plan owners age 70½ or older, you are required to begin taking RMDs!

If the distributions are not taken, or taken incorrectly, the IRS imposes a 50% tax penalty on the amount you were supposed to take!

If you need your RMDs for current income, the additional income taxes may not be as much of an issue. However, if you doN’t need all of your RMD and only take it because the IRS forces you to, you’re paying excessive taxes!

For example, assume an individual 70½ has $500,000 in IRAs, and the following income:

Pension Income – $14,400
Social Security Benefits – $9,300
Interest, Dividends, and Capital Gains – $19,500
Total Income – $43,200

Based on the Uniform Lifetime Expectancy Table and a factor of 27.4, the Required Minimum Distribution (RMD) will be $18,248.18.

The new total income, including the RMD, increases to $61,448.18!

The IRA Offset Strategy helps beat this tax trap by repositioning some of your taxable investments into tax-deferred investments.

The object is to reduce your taxable interest, dividends, and capital gains by at least the amount of your RMD. Hence, you offset the taxes. In the above example, taxable income would need to be reduced by at least $18,248.18.

The taxable investments in the portfolio that are responsible for the $18,248.18 of taxable income are simply repositioned into tax-deferred investments. Since tax-deferred income is not taxed until withdrawn, the IRA Offset Strategy can reduce your taxable income in the amount of your RMD.

So if your RMDs are creating excessive taxes and you own taxable investments like CDs, mutual funds, stocks, and bonds, consider the IRA Offset Strategy.
A simple reposition of some of your taxable investments into tax-deferred investments, could dramatically reduce your taxes.

Rick Kelly

Rick Kelly

Rick Kelly is a Certified Senior Advisor with Futurity First-Summit Financial Group in CO. He helps retirees to secure their retirements. To request A FREE “IRA Offset Worksheet” email him at or call his toll-free 24-hour resource line right now at 1-877-596-8233.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which products/investment(s) may be appropriate for you, consult with your attorney, accountant, financial advisor or tax advisor prior to investing or taking action.