Many people, when they are retired, need to take distributions from their retirement plans to pay for their needs and goals. Other people with additional resources may not need to make the required minimum distributions. Here are some tips for people who do not want the distribution that could be worthwhile.
Like Kind Distributions
If you have an Individual Retirement Account (IRA) that holds stock or mutual funds that you really like, and believe these investments will continue to fit well into your portfolio, you do not have to sell them in order to complete your required minimum distribution. You can have the IRA custodian simply transfer the funds to a non-retirement account as a “like kind distribution.” You of course would need to pay the income tax on the distribution as if you withdrew the monies from the account. But in this way you can keep assets that you like.
Paying Estimated Taxes
If you are an individual that pays quarterly income tax payments to the state or federal government and do not need the required minimum distribution from your retirement account, you can make arrangements for the retirement plan to make the required minimum distribution in December of each year directly to the IRS or state tax board as an estimated tax payment.
Normally, you are required to make equal quarterly payments for your estimated taxes. However, funds paid from a retirement account in December would not trigger any penalties for lack of payment earlier in the year. When your payment is made in December it is like having an interest-free loan from the government for a number of months during the course of the year.