Can You Control Required Minimum Distributions?

It may be harder to influence the timing or amount of RMDs, but retirees can definitely do more with the 'where.' [Morningstar](?utm_source=eloqua&utm_medium=email&utm_campaign=newsletter_improvingfinances&utm_content=55875&elqTrackId=e90b606359484176ac1849b66b0d1d08&elq=3b26685c24fb438a96074fe55d477f75&elqaid=55875&elqat=1&elqCampaignId=28403) [Improving Your Finances] Improving Your Finances with [Christine Benz]( [Christine Benz] For affluent retiree households, required minimum distributions from tax-deferred accounts can be a pain in the neck. The early years of retirement are often low tax years, as income from work has stopped and retirees have a lot of control over how much they take from their portfolios and, in turn, their tax bills. But once RMDs commence at age 73, retirees' taxable income is largely out of their hands and their tax bills often drift higher. Required minimum distributions can also bring knock-on effects like the income-related Medicare adjustment amount, an additional charge that Medicare-covered individuals pay if their incomes go above certain levels. The annoyances of RMDs are particularly acute for people who began investing for retirement in the 1980s and 1990s when pretax contributions were the norm. (Roth IRAs didn't become an option until 1997.) The question is, once you hit RMD age, how much control do you have over those distributions—the timing, the amount, and the source? [In my recent column]( I looked at each of those three levers. I concluded that while paying attention to where you turn for your RMDs won’t lower your tax bill, it can help you achieve other worthwhile investment aims. If I were taking RMDs, the first place I'd look in 2024 would be to my large-growth holdings. That’s because [they've racked up higher gains than any other Morningstar Style Box square for the year to date]( and over longer time frames as well, and lightening up on them could help reduce risk in a portfolio. This period reminds me a lot of the late 1990s and early 2000s—but is it really that similar? Amy Arnott took a closer, helpful look at whether large-growth stocks are in a bubble [with this article](. Also, with the US market trouncing non-US stocks over the short and longer terms, it's not surprising that some, or many, investors are questioning the conventional wisdom of adding international exposure to a portfolio. [John Rekenthaler examined the case for investing overseas]( in this piece, and I took a whack at the type of international exposure that confers the most diversification [in this one](. Finally, Dan Lefkovitz and I had a wonderful conversation with two topnotch international investors, David Herro of Oakmark and Rajiv Jain of GQG, at the Morningstar Investment Conference in late June. We recorded the discussion and are running it as [this week’s episode of The Long View podcast](. I hope that you'll enjoy hearing from these two seasoned hands as much as Dan and I did. With warm regards, Christine Benz [Is High Inflation a Good Time for Roth IRA Conversions?]( Tax and IRA expert Ed Slott says there’s a small positive with higher inflation: greater Roth conversion opportunities. [Watch Now]( Share: [facebook]( [twitter]( [linkedin]( ADVERTISEMENT [media]( [media] [Where International Diversification Works—and Where It Falls Short]( Recent diversification and performance benefits of non-US stocks have been muted, but that trend may not persist.  [Find Out More]( [David Herro and Rajiv Jain: Should US Investors Look Overseas?]( Two esteemed international investors discuss the case for non-US stocks as well as where they’re finding opportunities today.  [Listen Now]( [Why International Investing Makes Sense for Long-Term Investors]( Overseas markets aren’t as risky as they once were.  [Read the Full Commentary]( [Are US Large-Growth Stocks as Unstoppable as They Seem?]( Be cautious when you hear, “It’s different this time.”  [Read More]( 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 pans for the week ahead. [Watch Now.](morningstar/streams?utm_source=eloqua&utm_medium=email&utm_campaign=newsletter_improvingfinances&utm_content=55875) 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. All Rights Reserved. 22 W. Washington St. Chicago, IL 60602