She Turned Her RMD Into a Reliable Monthly Paycheck

At 78, most people assume the planning window has closed.

But when Barbara came to us, there was still plenty we could improve.

She'd been a disciplined saver her entire life. After her husband passed, she inherited his IRA. Now she had $80,000 in required minimum distributions every year.

Her old advisor told her to take the full RMD in December, then use it for Christmas gifts, vacations, and 529 contributions for the grandkids. She thought this was planning. Check the box, satisfy the requirement, assign some purpose to it.

But it wasn't planning. It was creating an unnecessary tax problem every single year.

Barbara's approach was costing her in two ways.

First, taking the full $80,000 at year-end meant a massive spike in taxable income. That pushed her into higher tax brackets for no reason.

Second, she was scrambling every December. Pull the money, figure out the gifts, make the 529 deposits, book the trip. It felt chaotic.

Think of it like grocery shopping once a year. You'd fill five carts in December, stress about using everything before it expires, and spend way more than necessary.

That's what she was doing with her RMD.

The solution was straightforward: turn her RMD into a monthly paycheck.

Instead of one big withdrawal in December, we spread it evenly throughout the year. Each month, a portion came out automatically and funded her living expenses.

For the gifts, vacations, and 529 contributions? We used her taxable brokerage account instead. That was far more tax-efficient than piling everything onto the RMD.

Barbara doesn't think about her RMD anymore.

Every month, the distribution happens automatically. It covers her expenses. She lives her life.

In March, she knows her firm is sending money to her kids. In summer, vacation funds are ready. In December, 529 contributions are handled.

No scrambling. No stress. No surprise tax bill.

Her tax situation improved because we stopped forcing all that income into one month. And everything runs on autopilot now.

She told me recently, "I didn't realize how much mental energy I was spending on this every year. Now I don't have to think about it at all."

If you're 70½ (QCD age) or older with RMDs, you don't have to take them all at once.

Spreading distributions throughout the year keeps you in lower tax brackets and gives you consistent cash flow.

And if you're doing gifting or charitable giving? Check whether your taxable accounts or even Qualified Charitable Distributions might be smarter than pulling extra from your IRA.

Even if you think your planning window has closed, there's often more room to improve than you realize.

One more thing – I read every single reply to these emails.

I use your responses to guide my content, so it might become next week’s deep dive.

Happy retiring,

Josh Rendler, CFP®

_{For privacy, names and minor details were changed. Education only, not advice. Consult your professional(s).}