UBCNews - Business - Smart IRA Management: Distribution Strategies & RMD Tips for Retirees

Episode Date: March 9, 2026

Welcome back, everyone! Today we're getting into something that affects nearly every retiree: IRA management and those dreaded Required Minimum Distributions, or RMDs. If you're over 73 or getting close, this episode is for you. Melia Advisory Group City: Tulsa Address: 5424 S Memorial Dr Website: https://www.meliagroup.com/

Welcome back, everyone. Today we're getting into something that affects nearly every retiree, IRA management, and those dreaded required minimum distributions, or RMDs. If you're over 73 are getting close, this episode is for you. Thanks for having me. Yeah, RMDs can feel overwhelming, but once you understand the basics, they become much more manageable. The key is knowing when they start and how they're calculated. Right, so let's break that down. When exactly do R&Ds? For traditional IRAs, you typically need to start taking RMDs at age 73. Your first one must be taken by April 1st of the year after you turn 73, and then every subsequent distribution is due by December 31st each year.

And what happens if someone misses that deadline? I've heard the penalties can be pretty steep. Oh, definitely. Missing an RMD deadline can result in a 25% excise tax on the amount you should have withdrawn. The good news is, under-sense tax. is under Secure 2.0. If you correct it quickly, that penalty can drop to 10%. But still, it's a hefty price to pay for forgetting. Ouch. So how do you actually calculate how much you need to take out? The IRS uses your IRA's value at the end of the previous year and divides it by a life expectancy factor.

You need to calculate it separately for each IRA you own, but here's the good part. You can take your total RMD from just one account or spread it across multiple IRAs. That gives you some flexibility. Mm-hmm. That's helpful. Now, does this apply to all types of IRAs? Not quite. Traditional rollover, sep, and simple IRAs all require RMDs. But Roth IRAs? They generally don't require RMDs during the account holder's lifetime, which is one of their big advantages. That's a huge difference. So if you're planning ahead, a Roth conversion might be worth considering? Exactly. And speaking of planning, you also need to think through how RMDs are taxed. They're treated as ordinary income, so that can bump you into a higher tax bracket. State taxes may apply too. I see. Makes sense. What about the actual withdrawal itself? Can you take more than the required amount?

Absolutely. You can withdraw more than your RMD if you need the cash, but keep in mind the excess doesn't count toward future RMDs. and you'll owe taxes on the full amount you take out. I actually had a retiree tell me once that they thought taking extra one year meant they could skip the next year. Unfortunately, that's not how it works. Ha! I bet that was a fun conversation. All right, that point about the tax burden sets up our next piece,

how RMDs ripple through other retirement benefits. But first, a quick word from our sponsor. Serving Tulsa and the surrounding area, Malia Advisory Group specializes in retirement planning with an income-first philosophy. They offer guidance on IRA management, distribution strategies, and required minimum distributions, helping retirees generate reliable income without eroding principle. Their team provides estate planning, social security analysis, and personalized consultations to prepare you for the financial realities of retirement.

Learn more at the link in the description. Picking up on that tax burden, how do RMDs actually affect things like Social Security or Medicare premiums? Great question. Because RMDs are taxed as ordinary income, they can push your modified adjusted gross income higher. That can trigger higher Medicare Part B and Part D premiums through something called IRMA or income-related monthly adjustment amount. It can also affect how much of your Social Security gets taxed. Wow. So there's more to consider than simply the money you're taking out. The ripple effects touch your entire financial picture. Precisely. That's why coordination is so important.

You want to look at your whole retirement income strategy, not just the RMD in isolation. Think of it this way. Your RMD isn't an isolated event. It's part of a bigger financial ecosystem. Right. That ecosystem point is really helpful. So to everyone listening, have you thought about how your withdrawals might affect your healthcare costs down the line?

It's definitely worth mapping. definitely worth mapping out. And here's something people don't always realize. You have options for how you receive your RMD. You can take it as a lump sum, set up a series of withdrawals, or even automate it so you never miss a deadline. Automation sounds like a lifesaver, honestly. Um, what if someone doesn't actually need the money for living expenses? You still have to take the RMD, but after that, you can reinvest it in a taxable brokerage account or use the funds for other purposes like contributing to a 529 plan for education expenses. Just keep in mind, once you take the RMD, you can't put it back into an IRA.

That's good to know. One last thing. What are the biggest mistakes you see people making with their IRAs? Three big ones, missing RMD deadlines, withdrawing too early and facing penalties, and choosing the wrong type of IRA for their situation. I had a client once who didn't realize their Roth IRA was inherent. So they missed RMDs for two years. It was a costly lesson. Uh, that's rough. So the takeaway here is

know your deadlines, understand your account types, and think holistically about how distributions affect your overall retirement. Exactly. Planning ahead makes all the difference. RMDs don't have to be stressful if you're proactive. Well said. Thanks so much for breaking this down with us today. To our listeners, we hope this gave you some clarity and confidence

and confidence as you plan your retirement. Until next time, take care.