With Dec. 31 fast approaching, now's the time for advisors to reach out to clients to ensure they don't miss that deadline — since doing so can be costly.
"It is a 25% penalty unless it is corrected within two years," Brennan Decima, owner of Decima Wealth Consulting in Saint Petersburg, Florida, told ThinkAdvisor. "Even if you correct it on time, it is still a 10% penalty."
Sometimes clients can benefit from taking more than the bare minimum.
Advisors should "make sure all year-end RMDs are taken, but also look to increase them if any part of a low tax bracket is not maximized," Ed Slott of Ed Slott & Co. told ThinkAdvisor Wednesday in an email.
"At the same time, advisors will have to monitor the projected AGI (adjusted gross income) for 2025 to see which AGI-based tax deductions or increases may come into play," including some from the new One Big Beautiful Bill Act, Slott said.
More clients will likely itemize their deductions under the new tax law, he added.
"This means gathering records, for example for charitable donations, medical expenses, and state tax payments, he said. "Keeping these records were not an issue for the past few years since most people did not itemize, but it is now."
Making the RMD deadline "should never be a source of stress," added Daniel Moisand of Moisand Fitzgerald Tamayo, LLC in Melbourne, Florida. "We know the RMD amount for the year as soon as January arrives. Good financial planners can lay out a plan early in the year that covers the gamut of issues."
We asked advisors to share their strategies for helping clients navigate RMDs. Here are six of them. Answers have been edited for length and clarity.
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