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4 Ways Railroaders Can Make RMDs Less Painful Thumbnail

4 Ways Railroaders Can Make RMDs Less Painful

Video Retirement Financial Planning Taxes

Are You Ready for RMDs? Smart Strategies for Railroaders

As your 401(k) continues to grow, so does your future tax bill—especially when it's time to take Required Minimum Distributions (RMDs). In this edition of the Highball Advisors Railroad Retirement Whiteboard, I’m John McNamara, and we’re talking about how railroaders can prepare for those inevitable withdrawals and reduce the tax burden that comes with them.

RMDs kick in around age 74 or 75, and since that money has never been taxed, the IRS is more than happy to take their share. But the good news? There are strategies to help lessen the impact.

In this video, I cover several key tactics:

  • Shift contributions: Consider funding Roth IRAs or taxable accounts instead of adding more to your 401(k).
  • Roth conversions: Take advantage of lower-income years in retirement to convert pre-tax savings to Roth accounts while staying within favorable tax brackets.
  • Qualified charitable distributions: If you're charitably inclined, donate directly from your IRA after age 70½ to reduce RMD impact.
  • Legacy planning: If your heirs are in a lower tax bracket, leaving them tax-deferred assets could reduce the overall tax bill.
  • Reinvesting RMDs: You can still grow your savings by reinvesting your withdrawals into taxable or Roth accounts.

Everyone’s situation is different, which is why I encourage all railroaders approaching retirement to go through the Boarding for Railroad Retirement process with me. We’ll look at your full picture and build an RMD strategy tailored to your goals.

Thanks for watching, and don’t forget to share this with other railroaders near retirement. Stay safe, stay on track—and take care!

 

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Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. Highball Advisors encourages you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Highball Advisors, and all rights are reserved from Highball Advisors, and all rights are reserved.