Welcome. You're tuning in for a deep dive that
honestly could save you a significant chunk of
your retirement savings. That's right. Today
we're tackling something really key for you,
especially if you've diversified into precious
metals within your IRA. We're talking gold IRA
required minimum distributions, RMDs. Yep, RMDs.
And we're drawing from some great insights by
Doug Young, who's really an expert in financial
investing, especially precious metals. So our
mission today really is to cut through the confusion.
We want to make these gold IRA RMD rules clear
for you. Exactly. We'll cover the why, the deadlines.
You really don't want to miss those, how you
figure out the amount, and importantly, your
options for actually taking the distribution.
Consider this your guide to handling this correctly
and without stress. Let's get into it. Okay,
so first off, why? Why does the IRS make us take
money out of... feels a bit backward when you're
saving for retirement? That's a really common
question. And it really boils down to taxes.
Simple as that, almost. Taxes. Yeah, these accounts,
like your gold IRA, they give you that great
tax deferral while the money grows, right? Right.
No taxes year to year. Exactly. So RMDs are basically
the government's way of saying, OK, time to pay
the piper. It ensures those deferred taxes eventually
get paid. It prevents people from deferring taxes
forever. And keeps everything compliant. Yeah.
Got it. But what happens if you slip up? If you
miss taking an RMD, I hear the penalty isn't
trivial. Oh, it's definitely not trivial. And
this is where you really need to pay attention.
The penalty is a hefty 25 % of the amount you
should have withdrawn but didn't. 25%. Wow. Yeah.
So let's say your RMD was $10 ,000. If you miss
it, that's a $2 ,500 penalty right there. Poof.
Ouch. OK, so understanding this literally saves
you money. big money potentially. Precisely.
Knowing the rules protects your retirement funds
from these, well, pretty costly mistakes. So
let's talk timing. For you listening, when does
this RMD obligation actually start? What's the
age? OK, the key age to remember now is 73. That
got updated by the Secure 2 .0 Act fairly recently.
73. Now, for your first RMD, there's a bit of
a grace period. The deadline is April 1st of
the year after the year you turn 73. Can you
give an example? That sounds a bit tricky. Sure.
So if you turn 73 any time in 2024, let's say.
Your first RMD isn't technically due until April
1st, 2025. April 1st, 2025. OK, that's clear.
But that's just the first one. Correct. Only
the first one gets that April 1st deadline. For
every year after that, your RMD has to be taken
by December 31st. That's the ongoing date to
remember that. That's the one. And it's important
to mention this applies to traditional IRAs,
including your gold IRAs. Roth IRAs are different.
Ah, right. Roths don't have RMDs for the original
owner, do they? Nope, not during your lifetime.
That's a key difference. What about inheriting
a gold IRA, say, from a parent? Do the same rules
apply then? Ah, inherited IRAs. That's a whole
different ballgame, really. The rules depend
heavily on who you inherited it from, like if
you're a spouse or not. Often, for non -spouse
beneficiaries, there's something called the 10
-year rule now. You might have to empty the entire
account within 10 years. The whole thing in 10
years, wow. Yeah, but, and this is important,
even with that 10 -year clock ticking, you might
still have to take annual RMDs within that period.
It depends on the specifics, like the original
owner's age and your own life expectancy. OK,
so inheriting definitely means you need to dig
into those specific rules. Absolutely. It can
get complex, so double -check if that applies
to you. All right, so we know the when. Now the
big question, how do you calculate how much you
need to take out of your gold IRA each year?
OK, the calculation itself is thankfully pretty
logical. It's basically a three step process.
Three steps. Let's hear them. Step one, you need
your starting point, which is the fair market
value of your gold IRA assets, specifically the
value as of December 31st of the previous year.
Previous year's end value. Where do you get that
number? Does the custodian provide it? Usually,
yes. Your IRA custodian should send you a statement
with that year in valuation. Makes it easier.
Good. Okay, step one. Get the December 31 value.
What's step two? Step two involves finding your
life expectancy factor. The IRS has tables for
this. You'll find them in publication 590B. IRS
publication 590B. Okay. Most people will use
the table called the uniform lifetime table.
You just look up your age for the distribution
year and it gives you a number, a divisor. A
divisor based on your age from an IRS table.
Got it. What's the final step? Step three is
just simple math. You take that account balance
from step one. The December 31st value. Right.
and you divide it by that life expectancy factor
you found in step two. Balance divided by factor.
Exactly. And the result, that's your RMD for
the year, the amount you have to withdraw. Can
we use the example from the article just to see
the number? Sure. So let's say your gold IRA
balance was $200 ,000 at the end of last year.
OK. And based on your age, your life expectancy
factor from the table is, say, 24 .6. Right.
You divide $200 ,000 by 24 .6. That comes out
to $8 ,130 .08. That's your RMD. $8 ,130 .08.
Okay, that calculation seems manageable, but
with a gold IRA, it's not like taking cash out
of a savings account. How do you actually take
that distribution? What are the options? That's
a great point. It's physical assets, potentially.
So you do have a few ways to handle it. Like
what? Well, option one is you can actually take
physical possession of the gold. the bars or
coins. Really? They send you the gold? Yes, an
in -kind distribution. But crucially, the value
of that gold when you withdraw it must meet your
RMD amount. You need an accurate valuation at
that moment. So using that $8 ,130 example, if
gold was, say, $2 ,000 an ounce. You'd need to
withdraw just over four ounces of gold to satisfy
that RMD, and then you have the physical gold
to store or sell yourself. OK, that involves
logistics. What if you don't want the physical
metal? Right. The second option is probably more
common. You instruct your custodian to sell a
portion of the gold inside your IRA. Sell it
first, then take the cash. Exactly. They sell
enough gold to cover your RMD amount, say that
$8 ,130, and then they distribute that cash to
you. Much more straightforward for many people.
Avoids handling the metal directly. Makes sense.
Is there a third way? Yes, there is. You can
also transfer the gold itself out of the IRA
and into a different type of account, like a
regular taxable brokerage account. So the gold
moves, but you don't sell it immediately. Correct.
It's still considered a distribution for RMD
purposes, the fair market value at the time of
transfer counts. This lets you keep the gold
investment just outside the IRA. Interesting.
So you satisfy the RMD, but maintain exposure
to gold prices. Precisely. But you need to make
sure it's handled correctly as a proper transfer,
usually trustee to trustee, to avoid issues.
Good to know. We mentioned the penalty earlier,
that 25%. Let's just hammer that home again.
What exactly happens if you miss the deadline?
Yeah. It bears repeating because it's significant.
It's officially called the excess accumulation
penalty, 25 % of the shortfall. So if your RMD
was $4 ,000 and you just forget. You owe the
IRS a $1 ,000 penalty. Straight up. Plus, you
still have to withdraw that $4 ,000 eventually
and pay regular income tax on it. So it's the
penalty on top of the withdrawal on taxes. Definitely
something to avoid. Absolutely. Staying organized
is key here. But what if... You know, life happens.
You realize after the deadline, oh no, I missed
it. Is there anything you can do? Are you just
stuck with the penalty? Not necessarily stuck,
but you need to act fast. First, take out the
missed amount immediately, ASOP. OK, withdraw
it right away. Then you have to file IRS form
5329. That's the form for reporting this kind
of thing and calculating the penalty. Form 5329,
got it. But here's a potentially helpful part.
The IRS might waive the penalty. Oh. If you can
show the mistake was due to a reasonable error
and you're taking steps to fix it, like withdrawing
the money quickly, you can request a waiver.
You'd attach a letter explaining the situation
to your Form 5329. OK, so there's a possibility
of relief if it was an honest mistake. Yes, and
there's another point too. If you catch and correct
the error within two years, the penalty actually
drops from 25 % down to 10%. 10 % is still a
hit, but much better than 25%. Definitely better.
So prompt correction helps even if you don't
get a full waiver. These details are really useful.
Let's make this even more concrete for you listening.
The article had some good examples. Can we walk
through those, like John with his traditional
gold IRA? Sure. So John is 76. His gold IRA was
worth $200 ,000 at the end of last year. Okay.
We look up his age, 76, on the uniform lifetime
table. Let's say his factor is 23 .7. Right.
So his RMD calculation is $200 ,000 divided by
23 .7. That works out to about $8 ,438 .82. And
he could take that as physical gold, cash from
selling gold, or a transfer. Exactly. He has
those three distribution options we discussed
to meet that $8 ,438 requirement. What about
the inherited IRA example, Susan? Right. Susan
inherited a gold IRA from her father. She's not
his spouse, so she likely falls under that 10
-year rule we mentioned. Meaning the account
has to be zeroed out within a decade. Generally,
yes. But the key thing for Susan is that she
probably still needs to take annual RMDs during
those 10 years. It's not just weight and empty
at the end. Ah, OK. Based on the inherited account's
balance? and her own life expectancy. That's
usually how it works for inherited RMDs within
that 10 -year window. Again, the specifics matter,
but annual withdrawals are often required. Inherited
rules definitely seem like something to get professional
advice on if it applies to you. Highly recommended.
OK, one more example. Mary, who has multiple
IRAs, including the Guild IRA, how does that
work? This is a really helpful scenario for a
lot of people. Mary has, say, a regular traditional
IRA, maybe another one, and a gold IRA. OK, three
accounts. Right. So first, she calculates the
RMD for each account separately using its own
December 31st balance and her life expectancy
factor. Calculate for each one. then add them
up. Exactly. She adds up the individual RMD amounts
to get her total RMD obligation for the year
across all her traditional IRAs. Let's say it
totals $19 ,607 .84. So that's the total she
needs to withdraw. Does she have to take a bit
from each account? No, and this is the flexible
part. The IRS lets her take that total RMD, the
$19 ,607 .84 from any single one of her traditional
IRAs, or any combination she chooses. Oh, interesting.
So she could take the entire amount just from
her regular IRA, even though... Part of the calculation
came from the gold IRA. Precisely. Or take it
all from the gold IRA, or split it however works
best for her, as long as the total amount withdrawn
across all traditional IRAs meets the total calculated
RMD. That's great flexibility if you want to,
say, leave the gold untouched one year. Exactly.
It gives you strategic options. Speaking of strategy,
let's touch on timing that first RMD again. You
mentioned the deadline is April 1st of the year
after turning 73, but you can take it in the
year you turn 73. Any reason to do one versus
the other? It mainly comes down to your tax situation.
You have that window. If you delay taking the
first RMD until that April 1st deadline. Which
is in the year after you turn 73. Right. You
need to remember that you'll also have to take
your second RMD, the one for that current year,
by December 31st of that same year. Ah, so you
end up taking two RMDs in one calendar year if
you delay the first one. Correct. You take the
year one RMD delayed and the year two RMD both
in year two. And that could potentially bump
you into a higher tax bracket for that year.
That's the risk. Taking two distributions in
one year means more taxable income reported for
that year. So you need to weigh that against
maybe taking the first one in the year you actually
turn 73. It's a planning point. A very important
planning point. The article also framed RMDs
not just as something you have to do, but maybe
as an opportunity, like for diversification.
Yeah, I think that's a smart way to look at it.
Once that RMD money comes out of the IRA, It's
free from those specific IRA rules. It's in your
hands, essentially. Right. So you can then decide
what to do with it. You could reinvest it in
a normal taxable brokerage account, maybe diversifying
into assets you don't hold in your IRA, like
different stocks, bonds, maybe even real estate
funds. Broaden your overall portfolio. Exactly.
Or for those listeners who are charitably minded,
you might look into doing a qualified charitable
distribution or QCD. A QCD? How does that work?
You can direct your RMD up to a certain limit
directly from your IRA to a qualified charity.
The advantage is that the amount sent via QCD
isn't typically counted as taxable income for
you, but it does satisfy your RMD requirement.
Oh, that sounds like a potential win -win if
you plan to give to charity anyway. It can be,
yes. Definitely something to explore if it fits
your goals. So the RMD forces the money out,
but you control where it goes next. This has
been incredible. helpful. It really feels like
understanding these gold IRA RMDs isn't just
about avoiding penalties, although that's huge.
It's crucial, yeah. But that's also about knowing
your options and maybe even using this mandatory
process to your advantage in your overall retirement
strategy. Absolutely. Being proactive is key.
Keep an eye on the rules as they can change like
the age limit did recently. Good point. things
evolve. And you know, while we've covered a lot,
talking to a qualified financial advisor about
your specific situation, your assets, your goals,
that's always a smart move. They can help tailor
a plan. Sound advice. So for you, our listener,
as you think about all this, here's something
to consider. You've got flexibility in how you
take that RMD. the physical goal, the cash, the
transfer, and you have options for what you do
with those funds afterwards. Right. So how might
really mastering these RMD rules open up some
new strategic possibilities for your wider financial
picture in retirement? Beyond just compliance,
how can it help shape your future? That's a great
question to ponder. Definitely some powerful
food for thought. Thanks so much for joining
us for this deep dive.