You can collect your annual RMD in a lump sum or in parts, perhaps in monthly or quarterly payments. However, delaying the RMD until the end of the year gives your money more time to increase deferred taxes. Either way, make sure to withdraw the full amount before the deadline. Yes, you can reinvest your RMD.
There are a couple of ways to do this. The easiest way is usually to sell investments in a retirement account and transfer cash to a taxable brokerage account. Investors usually want to withhold taxes at this stage and change the net amount, but if they already have enough cash set aside, it's not necessary. For some retirees, this is not mandatory; they need the money to live.
But managing an amount of cash is hard to do. A better way is to take the money at regular intervals to simulate a paycheck. We set up a distribution once a month and sometimes twice a month, Hook says. Psychologically, people do better with that because that's what they're used to.
An IRA depositary can help you do this. If you need to take RMD or will be taking it soon, start by drawing up a projected budget. That way, you can decide what part of your RMD, if any, you'll need for life during retirement. Review all the expected income streams you have or plan to have, such as pensions, part-time or full-time work, and annuities.
Many people overestimate their Social Security benefits, so consider using a calculator to plan payments more precisely.