{"id":35140,"date":"2025-08-12T13:17:01","date_gmt":"2025-08-12T13:17:01","guid":{"rendered":"https:\/\/financialrush.com\/?p=35140"},"modified":"2025-08-12T13:17:01","modified_gmt":"2025-08-12T13:17:01","slug":"what-to-do-with-required-minimum-distributions-if-you-dont-need-them","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=35140","title":{"rendered":"What to do with required minimum distributions if you don’t need them"},"content":{"rendered":"

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Seizavisuals | E+ | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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As year-end approaches, some older Americans must soon take required withdrawals<\/a> from retirement accounts<\/a> \u2014 and there are several options if you don’t need the money, experts say.\u00a0<\/p>\n

Most retirees must take required minimum distributions<\/a>, or RMDs, from pretax retirement accounts starting at age 73 or face an IRS penalty<\/a>. The first deadline is April 1 of the year after turning 73, and Dec. 31 is the due date for future years.\u00a0<\/p>\n

But some retirees have “a lot of guaranteed income” before RMDs, or spend less than they have coming in, according to Judy Brown, a certified financial planner who works at C&H Group in the Washington, D.C. and Baltimore area.<\/p>\n<\/div>\n

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More from ETF Strategist:<\/h2>\n
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Here’s a look at other stories offering insight on ETFs for investors.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

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In 2024, Social Security was the most common source of retirement income.\u00a0But 81% of retirees<\/a> had one or more types of private income, such as pensions, investments, rental income or employment, according to a Federal Reserve report published in May.\u00a0\u00a0<\/p>\n

When retirees have more than they need, there could be decisions about how to spend or reinvest their RMDs, experts say.\u00a0<\/p>\n

“It can definitely impact a lot of people,” and the right choice depends on your financial needs and goals, said Brown, who is also a certified public accountant.<\/p>\n

Here are some options to consider.<\/p>\n<\/div>\n

Reinvest with exchange-traded funds<\/h2>\n
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If you still want long-term growth, you can reinvest RMD proceeds into a brokerage account. But you need to choose assets carefully because the account incurs yearly taxes, experts say.<\/p>\n

Typically, experts suggest exchange-traded funds<\/a>, or ETFs, over mutual funds in a brokerage account because the assets are less likely to distribute capital gains or dividends throughout the year.\u00a0\u00a0<\/p>\n

“It’s also easier for tax-loss harvesting<\/a>,” which involves selling a losing brokerage account asset to offset other portfolio gains, Brown said.\u00a0<\/p>\n

Since ETFs trade throughout the day like a stock, you have more control<\/a> when selling specific assets, she said.<\/p>\n<\/div>\n

‘Skip the tax bill’ with a transfer to charity<\/h2>\n
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For charitable investors<\/a>, you could also consider a so-called qualified charitable distribution<\/a>, or QCD, experts say.\u00a0\u00a0<\/p>\n

Open to retirees age 70\u00bd or older, QCDs are a direct transfer from an individual retirement account to an eligible non-profit organization. For 2025, the limit is $108,000 per investor.\u00a0\u00a0<\/p>\n

Once you’re 73 or older, you can use QCDs to satisfy yearly RMDs and the transfer won’t increase your adjusted gross income.\u00a0<\/p>\n

“It’s the IRS’ best-kept secret for retirees,” said CFP Ashton Lawrence at Mariner Wealth Advisors in Greenville, South Carolina. “Skip the tax bill and help a cause you believe in.”<\/p>\n<\/div>\n

Legacy planning with a 529 contribution<\/h2>\n
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If legacy planning is important, you can also consider using RMDs to contribute to a 529 college savings plan<\/a> for your family, experts say.<\/p>\n

As of May 2025, more than 30 states<\/a> offer a state tax credit or deduction for 529 contributions, according to education website Saving for College. In most cases, this requires a deposit to your state’s plan. There is not currently a federal income tax break for contributions. <\/p>\n

“It’s not going to be enough to offset all of their state [income] taxes,” said Brown. But you can “get a benefit going for the grandchildren” while securing a state tax break for yourself, she said.<\/p>\n<\/div>\n<\/div>\n\n
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