Brace Yourself for Higher RMDs in 2024

And strategies to curtail future tax bills for people who aren't yet of RMD age. [Morningstar](?utm_source=eloqua&utm_medium=email&utm_campaign=newsletter_improvingfinances&utm_content=52778&elqTrackId=4b74aebf9f684a74ba1b6015a2dcec00&elq=b79881447cdf43518815b20d258045a5&elqaid=52778&elqat=1&elqCampaignId=26644) [Improving Your Finances] Improving Your Finances with [Christine Benz]( [Christine Benz] It's a high-end problem: Many investors who are subject to required minimum distributions—which currently commence at age 73—are apt to find themselves with their largest distributions ever in 2024. Not only does the percentage of your tax-deferred account balance that you're required to take out and pay taxes on the increase as you age, but most people's balances are elevated thanks to a soaring stock market in 2023. Those large RMDs, in turn, can elevate retirees' tax bills and cause other knock-on tax effects, such as [the Medicare income-related monthly adjustment amounts, or IRMAA]( levied on high-income retirees. In [this video]( tax and IRA expert Ed Slott and I discussed some strategies that RMD-subject investors might consider to lessen the tax burden, including [qualified charitable distributions](. If you still have at least a few years until RMDs start—and the RMD age is moving out to age 75 for people born in 1960 or after—it's an ideal time to consider the steps that you might take to reduce them. Even accelerating withdrawals from traditional tax-deferred accounts during the often-low-tax years after retirement can make sense in some situations. Amassing assets in Roth IRAs or [converting traditional IRAs to Roth]( are strategies worth considering since Roth IRAs aren't subject to RMDs at all. For people who earn too much to make direct Roth IRA contributions, [the strategy of going into a Roth IRA through the "backdoor" is still alive and well](. On the investment front, [Amy Arnott, Karen Zaya, and I recently revisited which asset classes add the most diversification to investors' portfolios and which you might as well skip](. My takeaway as I survey [the full research report]( is that you don't need to delve into complicated products to diversify your US stock exposure: Cash and high-quality bonds have been among the most effective diversifiers over time. And stay tuned: We'll be writing more about our findings in the weeks and months ahead. Finally, I'm always thrilled when people can hear from the deep team of researchers we have here at Morningstar. [This week on The Long View podcast]( Dan Lefkovitz and I chatted with Bryan Armour, who heads up Morningstar's passive strategies research. We got Bryan's take on whether asset flows to passively managed products are likely to abate (uh, no), [passive funds' performance edge]( [whether crypto ETFs were overdue]( and whether [active ETFs]( bring anything to the party. I hope you'll learn as much from the conversation as Dan and I did. With warm regards, Christine Benz [Brace Yourself for Higher RMDs in 2024]( Following a banner year in the stock market, investors subject to required minimum distributions could be in for a nasty tax surprise, Ed Slott says. [Watch Now]( Share: [facebook]( [twitter]( [linkedin]( ADVERTISEMENT [media]( [media] [How to Make a Tax-Free Charitable Donation From Your IRA]( Follow these 10 rules for qualified charitable distributions. [Find Out Now]( [How Retirees Can Avoid the 'Tax Torpedo']( Some retirement researchers are challenging the traditional thinking on tax efficiency, Social Security, and drawdowns. [Read More]( [How to Use a Backdoor Roth IRA]( Details and tax implications to keep in mind from tax and IRA expert Ed Slott. [Get the Details]( [Top 10 Things to Know About Building a Diversified Portfolio]( Here’s how some key asset classes fare as portfolio diversifiers and what that means for building your portfolio. [Discover Portfolio Building Tips]( [How Did Diversified Portfolios Hold Up in 2023?]( Delve into Morningstar's 2023 analysis of portfolio diversification strategies. Uncover insights on correlation trends, asset class performance, and what it all means for building diversified portfolios. [Dive In]( [Bryan Armour: Is Index Investing’s Superpower Unstoppable?]( A Morningstar researcher discusses rising passive share, bitcoin ETFs, and the future of active management. [Listen Now]( [Active Funds Fell Short of Passive Peers in 2023]( Long-term trends and low costs can help investors decide between active and passive funds. [Discover Recent Trends]( [Spot Bitcoin ETFs Are Here. Should You Invest?]( Why they hold advantages over bitcoin futures ETFs and how to choose the right one for your portfolio. [Find Out Now]( [The Best Active ETFs to Buy]( These actively managed exchange-traded funds earn high ratings from Morningstar in 2024. [Get ETF Picks]( Get Top Stock Picks and Market Insights Every Week on The Morning Filter. Every Monday morning, Susan Dziubinski sits down with Morningstar Chief U.S. markets strategist Dave Sekera to discuss what's on his radar, new Morningstar research, and stock picks or plans for the week ahead. [Watch Now.](morningstar/streams?utm_source=eloqua&utm_medium=email&utm_campaign=newsletter_improvingfinances&utm_content=52778) Stay connected: [twitter]( [facebook]( [linkedin]( [instagram]( [YouTube]( [Apple News]( [View online]( | [See all newsletters]( | [Share your feedback]( [Unsubscribe]( from this newsletter. Or update your [email preferences](. © 2024 Morningstar, Inc. 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