For many people, the biggest retirement question is: Will I have enough? But successful savers sometimes reach retirement with a very different question:

What am I supposed to do with all this money I’m required to take out?

Maybe Social Security, a pension, taxable investments, real estate income, or other assets already cover your lifestyle. Your IRA is there, potentially still growing, but you don’t actually need it to pay the bills.

That’s a good problem to have. But it’s still a planning problem.

A large traditional IRA can eventually create required minimum distributions (RMDs), which generally begin at age 73 under current rules. Those distributions can add to taxable income whether you need the cash or not. So rather than thinking of the IRA as “retirement money,” it may be time to ask a different question:

What do you ultimately want this money to accomplish?

 1. Consider Roth Conversions Before RMDs Begin

If you have years when your taxable income is relatively low—maybe after retiring but before RMDs begin—you may have an opportunity to deliberately recognize some IRA income through Roth conversions. A Roth conversion moves money from a traditional IRA into a Roth IRA. The untaxed amount converted is generally taxable in the year of conversion.

Why voluntarily pay taxes?

Because you may be able to pay them at a strategically chosen time rather than allowing a growing traditional IRA to dictate the timing later. Roth IRAs also aren’t subject to RMDs during the original owner’s lifetime.

That doesn’t mean converting the entire IRA is necessarily wise. Large conversions can create unintended tax consequences. The better question is often: How much could we convert this year without pushing other parts of the tax plan in the wrong direction?

(Planning note: If required distributions have started, you must complete your RMD before processing Roth conversions.)

 2. If You’re Charitably Inclined, Look at QCDs

Once you’re at least age 70½, qualified charitable distributions (QCDs) can turn an IRA into a particularly useful charitable-giving tool.

A QCD allows an eligible distribution to go directly from an IRA to a qualifying charity. When the requirements are met, the distribution can be excluded from taxable income, and QCDs can count toward an RMD. For someone who already gives regularly to charity and doesn’t need their RMD for living expenses, that can be a much more intentional use of the money than just taking the distribution, putting it into a brokerage account, and writing charitable checks later.

There are important rules about which accounts, charities, distributions, and amounts qualify, so execution matters.

 3. Think About Who Will Eventually Inherit the IRA

If you don’t expect to spend the IRA, it isn’t really just a retirement-income asset anymore; it’s becoming an estate-planning asset. And that changes the conversation.

For many non-spouse beneficiaries, current rules generally require an inherited IRA to be fully distributed within 10 years, although the specific distribution requirements depend on the beneficiary and the original owner’s circumstances. Taxable traditional IRA distributions are generally included in the beneficiary’s income.

That raises some interesting questions.

If your adult children are likely to inherit during their own peak earning years, what could those IRA distributions mean for their taxes? Would gradually converting some of the account to Roth during your lifetime make sense? Are there charitable organizations you would rather name as beneficiaries of some retirement assets while leaving different assets to family?

The goal isn’t necessarily to leave the largest IRA possible. It may be to leave your wealth in the most useful form possible.

 4. Coordinate the IRA With Your Charitable and Legacy Goals

An IRA doesn’t have to have one purpose. Part might eventually support your lifestyle. Part might be used for QCDs. Part could be converted to Roth. And part might ultimately pass to heirs or charitable organizations.

This is where retirement planning starts overlapping with tax planning and estate planning.

Instead of looking at each account separately, consider the bigger picture:

• Which assets are you most likely to spend?
• Which are you most likely to leave behind?
• Who do you want to benefit from them?
• What are the potential tax consequences for you?
• What might the tax consequences be for your beneficiaries?
• Are there charitable goals you could accomplish more efficiently with IRA assets?

The answers may suggest that different dollars should have different jobs.

Your IRA Doesn’t Have to Be Retirement Income

After decades of saving, it can feel strange to discover that you may never need to spend a substantial portion of your retirement accounts. But that’s when the planning gets interesting.

The question is no longer, “How much can I withdraw?”

It’s “What’s the smartest job for this money now?”

At Approach Retirement Advisors, we help clients look beyond individual accounts to understand how taxes, retirement income, charitable giving, and estate planning work together. If your IRA has grown beyond what you expect to need for retirement, let’s talk about what you want those dollars to accomplish next.

CLICK HERE to start the conversation.