Should You Gift Above Your RMDs? Suze Orman's Answer for Retirees With 17+ Years Left

A listener who is about 73 and financially comfortable was advised to withdraw more than the required minimum distribution from a traditional IRA and gift the excess to grandchildren immediately. The guidance given was to avoid gifting any money to children and grandchildren right now. The reasoning is that withdrawing above required minimums triggers ordinary income tax on the extra dollars and removes that money from the tax-advantaged account, reducing future compounding. The approach emphasizes keeping funds working in the retirement account while gifting only from the required minimum distribution. The concern is that future expenses, including long-term care, private nursing, and medical events, are uncertain and may be needed later in life.

""What I want you to do is not gift any money to your kids and grandkids right now whatsoever.""

""You do not know what your life is going to be at 83, at 93, at 97, which is when my mom died. You don't know what your expenses are going to be." Long-term care, a private nurse, a medical event insurance does not fully cover. None of these show up on a spreadsheet at 73."

""If you pull money out of a traditional IRA above what the IRS forces you to take, you pay ordinary income tax on every extra dollar, and once that money leaves the tax-advantaged wrapper, it stops compounding for you. Over a 17-year horizon, this can shave six figures off your own safety net.""

""Jean faces three choices: gift extra now, leave it in the traditional IRA, or convert the excess to a Roth. Suze rejected gifting extra and split the difference between keeping it invested and converting.""

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