Retirement Transition Planning

Transcription

1 Retirement Transition Planning Retirement Planning Social Security Strategy Optimization Retirement Income & Tax Management Investment Portfolio Risk Level in Retirement Required Minimum Distributions January 2019 Philip Michalek PDM Investment Services, LLC A Registered Investment Advisor 5131 Standish Drive, Troy, Michigan * * info@fginvestor.com See our website or brochure for our Disclosure, Fee Schedule and Privacy Policy

2 Retirement Planning Page 1 Old Linear Retirement School Work Retirement at 62 with pension End at 75 years old New Cyclical Retirement School Work (70% of pre-retirees say they want to keep working after they retire) Semi-retirement at 55 with no pension Lifelong learning Part time job, second career (50% of current retiree s work part time) Full-retirement at 70 End after 85 years old Social Interaction in Retirement Most people spend more awake time with their co-workers than their families. The more your identity is tied to your work, the more difficult it will be to find happiness in retirement. Jobs create connections, relationships and friendships. Some of these friendships will persist, but many will fade away. Early Retirement and your Health Early retirement can have a negative impact on physical, mental (self-worth, depression) and social health. It is critical you have an in-retirement plan. (exercise program, work/volunteer program and social activities) Keeping your brain active with mental stimulus can reduce the onset of dementia and Alzheimer s. See a certified professional retirement coach. Keeping Busy in Retirement Retirees who engage in hobbies, clubs, part-time jobs, volunteer work and join organizations are happier, healthier and more youthful. These activities help fill the social void from your job. Hobbies may be overrated. Spouse at home will have to adjust to you invading their space. Routine exercise plan, biking, running, walking, hiking, weight lifting Odd jobs around the house will not be a rewarding and will run out in the first year Helping parents, children and grandchildren Increase travel Playing golf on a league, bowling league, other sports like pickleball Gardening, going to a gardening classes, volunteer work at a local garden Meeting with friends for lunch Volunteer work at a church or another help organization Join an organization, Investment club Hobbies like beer or wine making, boating, fishing, crafts, woodworking, photography, dancing, playing a musical instrument or writing a book Second Careers Find a part time job you can love or start your own business. Identify your passion, current skills, learn new skills, build your network and evaluate demand for your service. See if you can turn a hobby or something you are passionate about into a second career. To prepare for retirement you should engage in retirement activities before you retire. Some of these activities could lead to a small business or a part time job for fun. Taking a class or getting a certification can be helpful. Most people work in retirement because they want to, not need to. Consultant, coaching and mentoring, tutor Gardening, cooking and baking Bookkeeper Event planner Computer repair, mechanical repair, home repair Home-care aid, pet sitting, nanny, personal assistant, senior watching Driver

3 Phases in Retirement Retirement Planning Page 2 1. Pre-retirement Planning Start planning at least 4 years before you retire for a part-time second career. To prepare for retirement you should engage in retirement activities before you retire. Some of these activities could lead to a small business or a part time job for fun. Taking a class or getting a certification can be helpful. Expand your business network, start volunteer work or work part-time in a field you may be interested in entering in retirement. See if you can turn a hobby or something you are passionate about into a second career. 2. Career Intermission Once you retire from your full-time career you should take some time off to recharge and retool. Do not wait more than a year or your skills will slip. 3. Re-engagement 80% engage in part-time work. (50% venture into a new field and 30% start their own business) 4. Full Retirement, Leisure Retirees with higher income will have to pay higher Medicare premiums for Part B and Part D. Reasons for a Failed Retirement Plan Overspending assets, second home, health care costs, adult children drain, divorce, elder fraud. Happiness in Retirement If you loved your job it will be harder to adjust to retirement. Close to 60% of those who retire will be seeking part-time work within a year. Studies show that the predominant reasons have more to do with social, intellectual and personal challenge factors, than with pay. Growing old with lots of money is no longer the goal. Dying rich can t compete with living rich. This generation is headed to the frontlines of cultural and world needs of making a difference and participating in loved one s lives. Real retirement will come on the expiration date of intellectual capital and experience. Vision of a Successful Retirement Retirement is defined as the point in time when no income comes directly from one s labor. Many people with adequate money struggle with being retired. What does a successful retirement mean to you beyond having money? Years before you retire, create a compelling vision of your retirement. Describe the perfect week in retirement, in detail. Will you be happy with this new routine? How will you fill the free time? Are you ready to spend a lot more time with your spouse? Retirement is not always like a long vacation full of fun. There is more to retirement than family, golf, travel and grandkids. Below are key categories that make up a happy retirement. Sense of Control Money & Health Follow a sound wealth building plan so you have enough money to live comfortably in retirement. Exercise, eat healthy and control the stress in your life so you will be healthy to enjoy your retirement without health issues. Good health correlates with higher levels of happiness. Optimism Belief in God - Sense of Purpose Helping Others Life is a journey with a beginning and an end. Make the best of each phase of your life. Accept your crosses, create a positive legacy to be remembered by, and have fun. People who have a sense of purpose and help others are happier. As you enter the later stages in life, it will become more important to believe you will go to a better place. Close Relationships Friends, family and close relationships are also very important. Married couples are happier in retirement than singles. Books on Retirement Happiness AARP Great Jobs for Everyone 50+, List of part time jobs in retirement, Kerry Hannon What s Next, General book about retirement life, Kerry Hannon Your Career Asset: Developing, Managing, Optimizing Career, Income and Retirement Planning, Michael Haubrich Your Greatest Financial Advantage, What Makes a Retiree Happy, Keith Bender Affective Wellbeing in Retirement, Journal of Happiness Studies, Andrew Burr and Jonathan Santo Reference Information: Financial Advisor Magazine, January 2012, by Dan Moisand, CFP

4 Social Security Strategy Optimization (Example) Page 3 The main focus is maximizing your lifetime benefit in-line with your life expectancy. Set a target retirement date and review the strategy periodically up until your file date. Variables David 1 Deborah 2 1. Birthdate/Age 1958/ /55 2. Marital status and history Married, once Married, once 3. Annual Income (now until retirement date) > $128,000 Retired 4. Life Expectancy Male, female Male 0 Female + Smoker no + past 0 Drinking habits moderate 0 moderate 0 Eating habits ok 0 good + Exercise habits good + good + Stress management ok 0 good + Your current health good + good + Family history > average + > average + Total +4/8 +6/8 5. Social Security Start Dates Break even ages Early Retirement Age 75% of Full Retirement Age (FRA) 100% 66, 8mo. 67 (62 vs 66) 76 to 78 Late Retirement Age 132% of (62 to 70) 79 to 81 (66 vs 70) 82 to Social Security Estimated Amount (in current dollars) See Social Security Statements on-line. Social Security benefits are based on the average of the top 35 years of earnings. Only up to the allowable max is counted each year, $128,400 in Use 50% of top earner if greater Social Security at 62 (As soon as possible) $2,013 mo. $427 mo. Social Security at Full Retirement Age (FRA) $2,835 mo. $629 mo. Social Security at 70 $3,599 mo. $784 mo. 7. Do you need the SS income? If not and you have a long-life expectancy you could wait. Social security will be reduced if your annual earned income exceeds $17,040 and you are taking social security before your Full Retirement Age. You will get lost benefits back at your FRA. 8. The last chance to file for a file/suspend or restricted application for married couples was April Social Security do-overs allow you to stop payments within the first 12 months and pay back. 10. Suspending your benefit allows you to stop payments at FRA and resume at 70 to increase payout. 11. If top earner is older than their spouse and spouse is projected to live longer, top earner may want to wait to increase payout for longer living spouse. 12. Widow benefit, spouse dies before 62, surviving child, X spouse benefit, re-married before Social security disability, childhood disability 14. Non-covered pensions, some government pensions may reduce your SS 15. To qualify for Social Security you need to have paid into Social Security payroll tax for a total of 10 years or be married to someone who has. 16. Social Security Trust fund is scheduled to start seeing more outflows than inflows by Solutions could be reduce the payout by 20%, moving the FRA out for future recipients, reducing benefits for retirees who can afford it or increasing the Social Security payroll tax. Select Your Strategy (Maximize Total Lifetime Benefit) Money Guide Pro Calculator Ages Break Even Ages (Need to collect 6 to 8 years after the later age to be ahead) SINGLE FULL PLAN Full plan includes all income sources, tax bracket, 78 69/64 and RMD using Money Guide Pro / /71 Social Security Calculators $40/year for web access, +$150 for consultant $50/year for web access, +$125 for consultant

5 Retirement Income & Tax Management Page 4 Create enough income to support your retirement lifestyle and minimize your taxes in retirement. Draw income from a mix of income sources to fill your Federal Tax Bracket. Stay in the lower capital gains tax bracket. It is common to spend the same amount in early retirement as pre-retirement if you have the money. It is common to spend more in the first half of retirement years and less in the second half years. RMD Tax Reduction Strategies 1. Start withdrawing money from your IRA s at 59.5 so you can delay taking Social Security until Perform Roth conversions in early retirement in low tax years. 3. Contribute your RMD after 70.5 to a charity or donor advised fund so distribution is not taxed. A $1,000,000 IRA or 401(k) RMD at 70.5 could produce over $30,000 of taxable income per year. Add that to your $50,000 joint social security annual income and you are into a higher tax bracket. Taxable accounts distribute dividends and capital gains each year that are taxed and the sale of funds to take money out of the taxable accounts can generate capital gains taxes at a 0%-15% rate. After you complete your taxes for the prior year, do your estimates for the new year in April and October. Tax Brackets (2018) Joint Taxable Income $19,050 to $77,400. Federal tax rate 12%. LT Capital gains and qualified dividends is 0%. Joint Taxable Income $77,400 to $165,000. Federal tax rate 22%. LT Capital gains and qualified dividends is 15%. Ordinary Income Taxed Retirement Sources Social Security For most couples wait until Full Retirement Age of 67 unless you need the income or do not expect to live past 78 years old. Maximize your Total Lifetime Benefit using a good Social Security calculator. Pension Start taking pension between 60 and 65 years old depending on your plan and needs. Part Time jobs Social security will be reduced if your annual earned income exceeds $17,040 and you are taking social security before your FRA. Traditional IRA and 401(k) tax-deferred accounts Hold on to tax-deferred growth if you can. Must start withdrawals at 70.5 at RMD table rate. Heirs must take RMD distributions. For Traditional IRA s, consider making charitable contributions. Appreciated Stock (< 70.5 years old) or QCD (> 70.5 years old, RMD) After Tax Income Retirement Sources Taxable Accounts (Joint, trust and individual) Only dividend and capital gains are taxed each year at a lower rate. Design and manage your portfolios in a tax efficient way with ETF s and tax loss harvesting. Heirs receive a stepped-up tax basis. Tax Free Income Retirement Sources Roth IRA, Roth 401(k) Grow tax-deferred and income is tax free. Draw income here for in high income tax years. Heirs receive a good tax-free investment. Life Insurance Proceeds are Received Tax Free

6 Investment Portfolio Risk Level in Retirement Page 5 Risk Tolerance (Risk survey) Risk tolerance is the amount of short-term price volatility and long-term investment loss an investor is willing to withstand before changing their behavior. Risk tolerance also considers the risk level needed to achieve your goals. Risk comes in the form of market risk, security risk, financial risk, valuation risk, economic risk, currency risk, political risk, interest rate risk, inflation risk and liquidity risk. Most investors are not trained to know their risk tolerance. At market tops, most people will say their risk tolerance is high. At market bottoms, they will say they have no tolerance for risk. Volatility is only a problem if you sell. There is long-term risk in not owning equities. Time Horizon The longer your time horizon, the higher the risk you can take. Risk Composure (How did you react in past bull markets, corrections and bear markets?) Risk composure is an investor s ability to consistently understand and correctly perceive the risks they re taking. Risk composure determines whether you are able to effectively stay the course during extreme market volatility, market tops and market bottoms. Unstable perceptions of risk lead to poor investment returns. Achieving goals based on a long-term plan is more important than a benchmark beating returns each year. To participate in bull market gains, you must also endure the risk of corrections and bear markets. Without some risk, reward will likely-be small. Risk Level Considerations Holding large cash levels in retirement is not recommended, it does not keep up with inflation. The more you understand the markets, the more likely you will be comfortable with more risk. Over long periods of time the stock market has been on an upward trend and has always recovered. Look at the 100-year stock market graph and see how insignificant corrections were over the long term. Bear markets should not worry you if you do not need most of the money at the time of the bear market. The stock market has produced positive returns over all 30-year periods since In most years, the stock market ends higher, even in years with corrections. Good moderate risk portfolios typically have one down year every four years. Investment Portfolio and Retirement Cashflow Projections (Financial Planning Software) Run your financial plan thru Financial Planning Software like Money Guide Pro to review your investment portfolio value and cash flow thru retirement and at the end of your plan. Inject corrections into the plan to see how they affect your investment portfolio value. Adjust your plan to a comfortable Probability of Success typically greater than 80%. Retirement account value projections with injected bear markets will show you how bear markets affect your total portfolio value. Justification for Higher Risk (More is better) If you are in the early stages of retirement and have 20 to 30 years left in retirement to recover. Large downturns in the accumulation/contribution mode are easier to recover from than in the decumulation/withdrawal mode. More aggressive Tactical Asset Allocation in retirement can help. Consider shifting from 75% equities to 60% equities as you age through retirement and when expected market returns are low. If you do not need the money from your investment portfolio for living expenses because you have a large pension, annuity or are still working part time. If most of the money will be passed on to your heirs, use their age risk level. If you need higher returns to support your income cash flow needs. (See Financial Plan Projections) A larger investment portfolio as you age creates a good self-insured Long-Term Care plan. Bond fund total returns are expected to drop from 5.0% the past 30 years to 3.1% the next 30 years. If you have no debt you may be able to take on more risk. If we are in the early or middle stages (now) of a secular bull market, you could take on more risk. Justification for Lower Risk (Enough is good) If your risk tolerance and risk composure is low and market volatility keeps you up at night. Less concerned about maximizing your investment worth for your heirs at the end of the plan. Wealth preservation is your main concern. PDM Investment Services, , info@fginvestor.com

7 Investment Portfolio Risk Level in Retirement Page 6 Many people reduce their risk level as they approach or start retirement. (60%/40%) Another common strategy is to start retirement at moderate risk (75%/25%) than move to a more conservative risk portfolio (60%/40%) as you age. Money Guide Pro (30-year future Projections) Common Risk Levels in Accumulation Years (30 to 60 years old) Annual Return Standard Deviation Moderate-Aggressive (80% stocks/20% bonds and cash) 6.2% 15.0% Moderate (75% stocks/25% bonds and cash) 6.0% 13.7% Common Risk Levels in Retirement Years (60 to 90 years old) Moderate (75% stocks/24% bonds and cash) 6.0% 13.7% Moderate-Conservative (60% stocks/40% bonds and cash) 5.4% (past 6.3%) 13.3% Conservative (50% stocks/50% bonds and cash) 4.8% 9.2% Dynamic Allocation 75%/25% Early in Bull Market, Long Term Indicator Positive 60%/40% Late in Bull Market, Long Term Indicator Neutral/Negative Common risk levels for different age groups Annual Return Annual Return Annual Return 5/10/15 Year 10 Year High/Low Projections Moderate-Aggressive Risk 85% Equities/15% Bonds/cash 9.4%/8.8%/8.0% +39%/-38% 6.4% (25 to 45 years old) Fidelity Asset Manager 85% (FAMRX) Moderate Risk 75% Equities/25% Bonds/cash 8.2%/8.0%/6.6% +36%/-35% 6.0% (45 to 60 years old) (45 to end) Fidelity Asset Manager 70% (FASGX) Moderate-Conservative Risk 65% Equities/35% Bonds/cash 7.4%/7.6%/x +33%/-30% 5.5% (60 to end) Fidelity Asset Manager 60% (FSANX) Conservative Risk 55% Equities/45% Bonds/cash 6.6%/6.9%/6.0% +31%/-28% 5.0% (60 to end) Fidelity Asset Manager 50% (FASMX) Fidelity fund performance from Morningstar and annual return projections from Money Guide Pro. (Sept 2018) Performance Variables The 35-year bond bull market (falling interest rates) ended in Bond fund returns will likely-be much less in the future. (Past 5.0% 1998 to 2017, MGP Future 3.1%) Bond portfolios will have to have short and intermediate-term bonds, floating rate bonds, high yield bonds alternative investments and money markets to produce higher returns. The 10-year stock bull market has created higher valuations. (S&P 500) Stock fund returns will likely-be less in the future. (Past 7.2% 1998 to 2017, MGP Future 6.8%) Past Returns 60% stocks /40% bonds 7.2% x 60% + 5.0% x 40% = 6.3% (Past) Future Returns 60% stocks/40% bonds 6.8% x 60% + 3.1% x 40% = 5.4% (Future) Inflation (MGP Prediction = 2.25%) Investment Advisor Management Fees (Vary from 0.5% to 1.5%) Investment Advisor Portfolio Performance (Vary from -2% to +2.0% alpha over appropriate risk benchmark) Needs for your investment portfolio income Will you need the money for living expenses? (Do you have a large pension?) Will you have stable job earned income in your 60 s? If you do not need most of your investment income, it should be invested for its heirs at a higher risk level. Example Moderate-Conservative Portfolio (60%/40%) Performance 5.4% -Inflation -2.25% -Management Fees -0.8% Total = 2.35% Risk level, portfolio performance & strategy, inflation and management fees are all significant around a 5.4% portfolio return. Vanguard believes Financial Advisors can add about 3% to your returns through investment selection, rebalancing, behavioral coaching and other services.

8 Investment Portfolio Risk Level in Retirement Page 7 Investment Portfolio Projections How much do you want left at the end of your plan for heirs? You may need to self-fund your LTC policy. Example Assumptions Investment portfolio of $2,000,000 at 60 years old. Your advisor outperforms its risk benchmark by 0.0% after advisor fees. (Alpha 1.0% - Fee 1.0%) Inflation rate of 2.25%. Moderate Risk Portfolio (75%/25%) annual return of 6.0% Moderate-Conservative Risk Portfolio (60%/40%) annual return of 5.4% Conservative Risk Portfolio (50%/50%) annual return of 4.8% Investment Portfolio withdrawal rate of 4% per year $80,000 ($6,667 per month) Part time job 60 to 67 $40,000 ($3,333 per month) Social Security at 67 $40,000 ($3,333 per month) At the end of your plan at 90 do you want to leave heirs $1,731,000, $1,171,270 or $716,630? $2,500,000 $2,300,000 $2,100,000 $1,900,000 $1,700,000 $1,500,000 $1,300,000 $1,100,000 $900,000 $700,000 $500,000 $300,000 $100,000 -$100,000 -$300, Moderate Risk 6.0% Return. 90 Years Old Moderate- Conservative 5.4% Return 90 Years Old Conservative 4.8% Return 90 Years Old PDM Investment Services LLC

9 Investment Portfolio Risk Level in Retirement Page 8 Stock Market Past Returns: Long Term Graph Over long periods of time the market has been on an upward trend. Every bear market ended and was followed by a bull market. The secular bear markets during the early 1900 s, 1930 s to 1940 s, 1970 s and 2000 s were just setbacks. Stock Market Past Returns: Year-by-Year Returns and Intra-Year Declines Below is a graph of annual returns and the intra-year decline in that year. In most years, the stock market ends higher, even in years with corrections. Investments that have positive returns 3 out of every 4 years are considered normal. In order to participate in the bull market gains each year (bars above the lines), you must also endure the intra-year corrections during the year (bars below the line).

10 Required Minimum Distributions (RMD) Page 9 The First Year you turn 70.5 years old, you must take your first RMD distribution by April 1 st of the next year. Each Year After, you have until December 31 st of that year to take the distribution. For large accounts, consider the timing of when you take the RMD during the year. Take early in the year if the market is high and you expect a bear market later in the year. Take later in the year if we are in a strong bull market or the market is down early in the year for the tax deferred growth. You could take some out each quarter to get a dollar cost averaged price out. The penalty for not taking the distribution is a 50% penalty on the RMD amount you should have taken out each year. See your CPA to make sure you are doing the correct distribution. Make sure you have a list of all your IRAs. The following require an RMD annual distribution. For like accounts, you may calculate separately and take the distribution for one of the like accounts. Traditional IRA s, Rollover IRA s, SEP IRA s, Simple IRA s 401(k) s, 403(b) s, 457 s Qualified IRA Annuity Inherited IRA s (See complicated IRS code) Inherited Roth IRA if not original owner. (See IRS code) Roth IRA s do not require annual distributions Still Working Exemption If you are still working past 70.5 (and do not own more than 5% of the company) can delay RMDs on the company plan until you retire. Qualified Charitable Distributions (QCD) Allow retirees to divert all or part of their RMDs to a Charity or Donor Advised Fund to avoid paying taxes on your RMD distributions. The distribution does not count as taxable income but you can t claim the QCD as a charitable contribution. Each year in December, Congress has typically extend this provision one more year. RMD Calculation Calculate the RMD for each IRA type account individually (IRA, SEP IRA, SIMPLE IRA). Take the RMD out of each account or you can take the sum out of one of the alike accounts. Spouse distributions must be separate. 403(b) s can also be aggregated together. Inherited IRA s and 401(k) s must come out of their account. The RMD for the present year calculation is based on the account balance on December 31 st of the previous year. Divide the balance by the divisor in the Uniform Lifetime Table (IRS Publication 590) based on your age that year for the distribution amount. The First Year, if your birthday is between Jan 1 and June 30, use the age 70, if it is between July 1 and Dec 31 use 71 for the age in the calculation. Joint Life Expectancy Table for client whose spouse is 10 years younger and was the sole beneficiary for the entire year. Single Life Expectancy Table is used for IRA beneficiaries. Tax Documents Form 1099-R shows previous year distribution. Submit with that year taxes. Form 5498 shows account value at end of last year and new-year RMD calculation for the new year. Form 5329 to request a waiver of the 50% penalty the first year. Distribution Process Find you RMD amount from Form 5498 or calculate from the table. Fill out the IRA Distribution Request Form from your custodian. (RMD amount, Federal tax withdrawal and state tax withdrawal amount) Submit IRA Distribution Request Form to your custodian before December of each year. RMD Taxes Distributions are taxed at the ordinary income tax rates. Federal and State taxes can be taken out at the time of distribution. In most states like Michigan (4.25%) taxes are required to come out. If you want to take 0% state taxes out, you can submit a MI W-4P form to your custodian if you qualify. If born before 1946 you can subtract up to $52,000 of pension/income (IRA/401k/403b etc.) and own $0 taxes. Example: RMD $10,000 + SS $2,000 + Investment dividends $3,000 + Capital Gains $2,000 = $17,000 < $52k.

11 Required Minimum Distributions (RMD) Page 10 Inherited IRA / Beneficiary IRA Below is my interpretation. Always consult a CPA due to the complexity of this IRS code. Your Name and Deceased name are on the title. Contributions are not allowed. A Stretch IRA Strategy can be used on Traditional or Roth IRA s. The strategy involves naming someone younger as the beneficiary for your IRA so they can use their RMD factor for calculating RMD distributions stretching the life of the IRA longer. You could put a younger wife, child or grandchild as beneficiary. Spouse died before 70.5 Spouse roll into an Inherited IRA or their Own Spouse Rollover IRA if over (more legal protection and RMD s start at 70.5) Distribute based on beneficiary s age starting at owner 70.5, use Table 1 OR Designate self as the account owner. OR Take entire balance by end of 5 th year following death. 0% penalty. Spouse died after 70.5 already and taking RMD distributions Spouse roll into an Inherited IRA or their own IRA (more legal protection) Can do a direct rollover. Can take RMD s over beneficiary s life and age, Table 1 The owners age if owner s life if longer (stretch IRA, designated bene). OR Withdraw the full amount and pay taxes. Non-spouse died before 70.5 Roll into an Inherited IRA or take full distribution paying taxes, 10% penalty waived. Use 60-day rollover rule, no direct rollover. Option A: Stretch Option B: Option C: Start taking RMD by 12/31 of the year following death. (Penalty waived) RMD Factor use beneficiary age the year after death. Reduce RMD Divisor Factor by 1 for each year after first year. (Only need table for first year) Take RMD distributions over beneficiaries life expectancy, table 1, single. Take entire distribution by 12/31 of the fifth year following the IRA owner s death (5 year-rule) 10% penalty waived. Missed the 5-year without any distributions. Take the entire distribution now. When taking distributions you should pay the federal and state taxes. When you do your 2018 taxes you will have to fill out a Form 5329 and a Penalty Waiver Letter based on the taxpayer did not know the process and the custodians did not process any RMD s in letter. Non-spouse died after 70.5 and taking RMD distributions Beneficiary must roll into an Inherited IRA Use 60-day rollover rule, no direct rollover. Use younger of owner or beneficiaries age at birthday at year of death, beneficiaries age at year-end following year of owner s death. Reduce beginning life expectancy by 1 year for each subsequent year. Can take owner s RMD for year of death. Start taking RMD s by April 1 st of the year following the year in which the IRA owner reaches age Use Table 1 See IRS Publication 590-B, Also see your tax professional.