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Advice for Baby Boomers Nearing Retirement

By October 27, 2016No Comments

You’ve worked your whole life for this, and now that retirement is upon you the right strategy is imperative. Otherwise you could wind up sacrificing some of your retirement savings to unnecessary fees and penalties. Here are some tips to avoid the pitfalls and optimize your retirement savings.

What’s an MRD?

As a baby boomer you should get familiar with the term MRD, or minimum required distribution. This is the amount the IRS requires that you withdraw from your retirement account, whether you’re invested in an IRA, 401(k) or another defined contribution retirement plan, such as a 403(b).  If you miss the MRD you can face a fine of as much as half of the amount you were supposed to receive. 

The milestone age is 70 and one half (remember those half birthdays as a child? Well they come into play again in retirement!) This is the age at which MRDs begin. There are some ways around it if you don’t want to add to your taxable income just yet. 


If you’re invested in an IRA, for instance, you can postpone the MRD until April in the year after you reach the milestone age. Bear in mind that you’ll have to take a double deposit in the year you begin taking MRDs. 

Employer-Sponsored Plan

If you’re invested in an employer-sponsored retirement plan, such as a 401(k) or 403(b), the key to avoiding the MRD is to keep working. If you’re still employed by the sponsor of the retirement plan, the MRD can be postponed until the following year, similar to the IRA investor. 


When it comes time to collect your MRD, you might not want to add to your income as this could bolster you to a higher tax bracket. A way to avoid this is to direct the distribution someplace else, such as a charity or other non-profit organization. Of course this is in the event you won’t need the distribution for health costs, etc.  


Retirement can be a tricky landscape to navigate. Contact us at Roberts Tax Advisory to discuss your retirement needs.