Mattson Financial Services - October 2018

F I N A N C I A L S E R V I C E S , L L C


October 2018

Get the Most Out of Your RMDs

Not only will the education of this client’s grandchildren be paid for, so will future generations of great-grandchildren. This family will have educational opportunities for years to come, which in turn, has a positive effect on society as these generations graduate and contribute to the world around them. Of course, everyone’s situation is different. Your children or grandchildren may not need this kind of assistance. Or you may not want to provide it. Another route you can take is to direct your RMDs toward charities or nonprofits. One couple we work with wanted to be million- dollar contributors to the Michigan State science department. They set up a fund using their RMDs so that upon their passing, $1.5 million would go to the school and they would become foundation donors. These are just two examples of how you can make a huge, lasting difference. When you don’t need your RMDs — and you don’t want to pay the 50 percent penalty fee — you can direct that money elsewhere to a cause you really care about, whether it’s for family or charity. If you have questions about these options, or you want to develop a different plan to get the most out of your RMDs, give us a call. We’ll help you put together a strategy that works best for you and your family. –Gary Mattson

W e’ve talked a lot about required minimum distributions — RMDs — in the past. It’s a topic we bring up regularly because navigating RMDs can be perilous. For one, if you don’t plan for them, because you think you don’t need them or you forget, you’ll face a 50 percent penalty. That can amount to a significant sum of money regardless of your retirement needs. We recently sat down with a client who, after careful planning, did not need to utilize their RMDs to fund their retirement in any capacity. So we looked at their objectives to see how they could get the most out of their RMDs.

One of their objectives was to maximize education for their grandchildren and for future generations of great-grandchildren. RMDs are a great way to do just that. You can fund a large endowment, or you could do what our client decided to do: He purchased a life insurance policy that served as the start of a family foundation. As a result, the client paid a relatively small amount of money to build up a great return when they pass. Properly invested, this amount of money has the potential to ensure that any grandchildren who go to college will have their undergraduate studies paid for in full regardless of where they attend school.

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