Planning for Required Minimum Distributions (RMDs)

Jan 29, 2025 | Retirement Planning

If you save for retirement in a qualified plan, such as a 401(k) plan or an IRA, the government currently requires you to take withdrawals from these accounts during retirement. The withdrawals, known as required minimum distributions or RMDs, are taxable so it’s a good idea to plan ahead and avoid unexpected tax consequences.

Here is some basic information about RMDs. It is offered with the caveat that RMDs have complex rules. It’s important to talk with your financial or tax professional before taking action.

If your 73rd birthday is in 2025 , your first RMD must be taken by April 1, 2026. Your second RMD by December 31, 2026, your third RMD by December 31, 2027, and so on.1

If you delay your first distribution until April 1, 2026 , then you will need to take two RMDs in the same year.1

If you have multiple 401(k) plan and IRA accounts , you typically must calculate the RMD for each one of them. You can, however, withdraw the entire amount from a single account.2

If you’re still working at age 73 , you don’t have to take an RMD from your workplace retirement plan account (as long as the plan allows it). This exception does not apply to traditional IRAs. You must take RMDs from traditional IRAs, even if you’re still working.2

If you inherit an IRA from a spouse (after 2019) who already reached age 73, you will normally need to take an RMD for the year of death, if your spouse did not already take one. If your spouse dies before age 73, you may be able to keep the inherited account, roll it over into your IRA, or withdraw the money in a lump sum or over a period of time.2

If you inherit an IRA from someone other than your spouse (after 2019), usually the funds must be completely withdrawn from the account within 10 years. RMDs may be required if the person from whom you inherited the account was already taking RMDs.4 There are some exceptions.

If you miss an RMD deadline or you don’t withdraw the full amount, penalties are steep. The penalty tax is 25 percent of the amount you failed to withdraw. If you correct the issue within two years, the penalty tax is lower.1

If you own a Roth IRA or Designated Roth account in workplace plan, you do not have to take RMDs—unless you inherited the account. In that case, RMD rules usually apply.1 Again, the rules governing RMDs are complex.

If you would like help, or if you have questions, please get in touch. Call 605-352-9490 in Huron or 605-357-8553 in Sioux Falls.

Not a Cornerstone client? 

Rules regarding Required Minimum Distributions (RMDs) can be complex, and missing a deadline can be costly. We help our clients navigate RMDs and the many other pieces of a comprehensive financial plan. How can we help you? Call 605-357-8553 or email cfsteam@mycfsgroup.com today and schedule your complimentary, no-obligation appointment.

Sources

  1. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds
  2. https://www.irs.gov/retirement-plans/rmd-comparison-chart-iras-vs-defined-contribution-plans
  3. 11 https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary
  4. 12 https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary

CSP #707048 (in CGC Weekly Commentary) Exp. 1.27.26

Identity Theft and Taxes Protect Your Return From Tax-Related Identity Theft

Jan 15, 2025 | Estate Planning

What is Identity Theft?

Identity (ID) Theft is a fraud committed or attempted using the identifying information of another person without authority. ID Theft impacts 1 out of 5 people, occurs every 2 seconds, takes 9 minutes for fraudsters to access hacked information, and can now be committed electronically (via email or a smartphone) to gain access to personal information.

The smart device age has made our lives easier, but it’s also made us more vulnerable. Identity theft, once a distant threat requiring break-ins and dumpster dives, has become an ever-present concern thanks to digital ubiquity. With the prevalence of e-filing, that holds especially true during tax season. Last year, the IRS reported identifying 1.1 million potentially fraudulent filings by early March.

Cornerstone is proud of the work we do to keep your data safe and the additional layers of protection and support we offer through our association with Raymond James. However, taking individual steps to protect yourself and your data is critical.

 

Know the signs.

Whether it’s a letter concerning information you never requested or an alert that an online account was created in your name, getting unexpected communications from the IRS is usually the first warning sign of tax-related identity theft.

  • The IRS does not routinely email, make phone calls or communicate with individuals through social media.
  • Explore more red flags at irs.gov/newsroom/taxpayer-guide-to-identity-theft.

 

Keep safe.

Taking a more defensive approach to your online life is simpler than you might think.

  • Password managers, such as those built into browsers or dedicated apps like Bitwardenand 1Password, can help you generate stronger passwords, update them regularly, and keep them secure and encrypted in a single location.
  • Enable multifactor authentication across your accounts.
  • Stay current with software and operating system updates.
  • Audit your online footprint: Make a list of all the sites you’ve created a username and password for and deactivate unused social, shopping and nonessential accounts.

 

Take action.

  • File your taxes as early as possible – as soon as all the necessary forms arrive. This can help ensure a return is on its way before a bad actor even has the chance to attempt theft.
  • Enroll in the IRS’s identity protection PIN (IP PIN) program. The IP PIN is a unique six-digit number generated each year to protect the use of your Social Security number.  

 

If you have a reason to suspect you are the victim of tax-related identity theft, we encourage you to respond immediately to any IRS notices and visit IdentityTheft.gov for guidance on protecting yourself and securing accounts. If an e-filing is rejected because taxes have already been filed using your information, you may need to complete IRS Form 14309, Identity Theft Affidavit, and include it with a paper filing.

If you’d like to discuss additional security – or savings – get in touch any time.

Learn More

Identity theft resources from usa.gov

Recovering from identity theft (from ftc.gov)

Don’t miss our Education Event:

Beyong the Firewall: Privacy, Security, and Account Protection

Feb. 11 | 6:15pm | Hilton Garden Inn Sioux Falls South Or via Zoom

Hilton Garden Inn Sioux Falls South – 5300 S Grand Cir, Sioux Falls 57108

Register

Not a Cornerstone client? 

Contact us today at 605-351-8553 or cfsteam@mycfsgroup.com if you’d like to learn more about the unparalleled service you can expect from the Cornerstone team.

CSP #695994 Exp. 1.14.26

Sources: raymondjames.com, irs.gov, cnbc.com

Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional. Material created by Raymond James for use by its advisors. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.

Gita Hendricks | Thank You Message

Dec 31, 2024 | #Cornerstone Community

A message from Gita following the December 12th Open House celebrating Christmas and her Retirement from Cornerstone after seven years. Gita’s last official day with Cornerstone was December 20, 2024.

As I sit down to reflect on the past few weeks and years, my heart is overflowing with gratitude. I want to take a moment to thank everyone who supported and attended my retirement reception. Your presence, hugs, kind words, and well-wishes meant more to me than I can possibly express. It was an incredibly special day, and I am deeply touched by the outpouring of love and support.

This isn’t the first time I’ve “retired,” but it has undoubtedly been the most memorable one. The joy and warmth I’ve experienced during this transition are beyond anything I could have imagined.

I’m excited about the opportunities that retirement will bring. For the first time in a long while I have the freedom to choose exactly what I want to do. Getting my house cleaned is at the top of my list…we’ll see if that happens!  I’m looking forward to traveling with Mike, both within the U.S. and beyond. Exploring new places and experiencing different cultures has always been a dream of mine, and I’m thrilled to have the time to make it a reality. And, of course, enjoying entertaining my friends and relatives often – stop by anytime, I’ll whip up a batch of guacamole and chips.

In addition to traveling and entertaining, I plan to dive deeper into my love for crafts and art. I recently discovered the joy of using crushed and cut glass, joining it with jewelry, dried flowers, leaves, seashells, or rocks. Each piece is a unique artistic vision, arranged on canvas, wood, or sculpture. I can’t wait to see where my creativity takes me. Retirement feels like the perfect time to nurture these passions and see how they evolve. Come to think of it, this may go to the top of my list…the house can wait!

Thank you all for being a part of my journey. Your support has meant the world to me, and I’ll carry your kindness with me into this new chapter. I’ll always hold the memories we’ve created close to my heart.

Here’s to the next adventure!

 

With love and gratitude,

Gita

CSP# 680883 Exp. 12.23.25

Secure Passwords

Oct 22, 2024 | #Cornerstone Community

Strong passwords are the first line of defense against unauthorized access to your financial data by hackers with sophisticated tools to easily defeat weak ones.

Read more about creating an ironclad password.

Tips for an unthwartable password:

  • Avoid using the same password across multiple accounts. This includes variants of the same password.
  • Consider using a reputable password manager to store and generate strong passwords (LastPass or Dashlane are two examples.)
  • Two-Factor Authentication adds an extra layer of security by requiring a second piece of information to authenticate.

Passwords and phishing attacks:

  • Double-check the URL before clicking links and entering passwords.
  • Set up secure account recovery methods like using a mobile number or alternate password.
  • Avoid entering passwords on public computers, which may contain malware.
  • Regularly rotate your passwords to reduce risk and avoid using the same password for extended periods.

Raymond James is not affiliated and does not endorse LastPass or Dashlane.

CSP #605343 Exp. 9.24.25

Fraud Alert

Sep 5, 2024 | #Cornerstone Community

Who can place a fraud alert?

Anyone who suspects you have been, or are about to be, a victim of identity theft or fraud can place a fraud alert on their credit report. Appropriate if your wallet has been stolen or if you’ve been taken in by a phishing scam.

What does a fraud alert do?

A fraud alert will make it harder for someone to open a new credit account in your name. Potential creditors must use what the law refers to as “reasonable policies and procedures” to verify your identity before issuing credit in your name. Basically, a business must verify your identity before it issues new credit in your name. The steps potential creditors take to verify your identity may not always alert them that the applicant is not you.

When you place a fraud alert on your credit report, you can get a free copy of your credit report from each of the three credit bureaus.

Duration: A fraud alert stays on your credit report for at least 90 days and up to one year. After a year, you can renew it.

Cost: Free

How to place a fraud alert: Contact any one of the three credit bureaus — Equifax, Experian, and TransUnion. You will need to provide appropriate proof of your identity, which includes your Social Security number, name, address and other personal information that the credit bureau requests. You don’t have to contact all three. The credit bureau you contact must tell the other two to place a fraud alert on your credit report.

Extended Fraud Alert

Who can place an extended fraud alert?

An extended fraud alert is only available to people who have had their identity stolen and completed an FTC identity theft report at IdentityTheft.gov or filed a police report.

What does an extended fraud alert do?

Like a fraud alert, an extended fraud alert will make it harder for someone to open a new credit account in your name. A business must contact you before it issues new credit in your name.

When you place an extended fraud alert on your credit report, you can get a free copy of your credit report from each of the three credit bureaus twice within one year from when you place the alert, which means you could review your credit report six times in a year.

In addition, the credit bureaus will take you off their marketing lists for unsolicited credit and insurance offers for five years, unless you ask them not to.

Duration: An extended fraud alert lasts seven years.

Cost: Free

How to place an extended fraud alert: Contact any one of the three credit bureaus — Equifax, Experian, and TransUnion. You will need to provide appropriate proof of your identity, which includes your Social Security number, name, address and other personal information that the credit bureau requests. You don’t have to contact all three. The credit bureau you contact must tell the other two to place an extended fraud alert on your credit report.

What Doesn’t A Fraud Alert Do?

While a fraud alert can help keep an identity thief from opening new accounts in your name, it will not:

  • Protect you from an identity thief using your existing credit cards or other accounts.
  • Protect you from an identity thief opening new accounts in your name that do not require a credit check – such as a telephone, wireless or bank account.

And, the fraud alert alone won’t stop any identity theft that is already under way.

Sources:

https://consumer.ftc.gov/articles/what-know-about-credit-freezes-and-fraud-alerts#alerts

https://www.raymondjames.com/privacy-security-and-account-protection/credit-report-fraud-alerts

 

CSP #576097 Exp. 8.20.25