The Discerning Investor

Questions continue to arrive in my email about required minimum distributions (RMDs) from retirement accounts, and with good reason, considering the amount of change (and confusion) for RMD-related regulations that came from the two SECURE Acts, which were signed into law in 2019 and 2022.

"Andrea" asked about the following situation in regard to a Simplified Employee Pension IRA, or SEP-IRA:

"I will be reaching 73 this year and will be taking distributions from my traditional IRA and inherited IRA. The question I have is if I continue to be a self-employed 1099 NEC worker, must I take my RMD from my SEP-IRA? I will be making a contribution this year into the SEP. ... I have done a lot of reading, have a tax adviser that is unsure about this and need clarification on this soon. I am the sole participant with this plan and do not have employees."

There's a lot to discuss here, and while I will offer an overview, the final answer will have to be confirmed by Andrea's tax adviser, as every person's tax situation is unique.

Andrea's core question is whether a self-employed individual can delay RMDs from her SEP-IRA retirement account because she is still working.

I can give you my answer ("no"), but, again, readers need to rely on their own tax advisers for answers.

Let me give you an idea of how I would think this through.

First, RMDs are currently mandatory at age 73 unless there is an exception in the law. So, you're looking for a clear exception specifically for SEP-IRAs that would apply to the self-employed "owner" of the business who is still working.

There is a "still working" exception for 401(k) plans, but it doesn't apply to someone who owns 5% or more of the stock of the employer. Additionally, 401(k) plan rules don't apply to SEP-IRAs, and a self-employed individual is the 100% owner of the business.

If you look for a "still working" exception for SEP-IRAs, you won't find one.

Quoting from an IRS FAQ on RMDs for retirement plans and IRAs, "Owners of traditional IRA, and SEP and SIMPLE IRA accounts must begin taking RMDs once the account holder is age 73, even if they're retired" (tinyurl.com/y9wajm4z).

Second, when a tax adviser is uncertain of the answer to a question, it's always a good idea to ask the following: If we conclude that Andrea doesn't need to take an RMD in 2025, and we're wrong, what happens? This puts things in perspective. Andrea would face a tax penalty of 25% on the amount of the RMD that she should have taken. Assume the RMD is $10,000; the penalty would be $2,500.

Again, quoting from the IRS FAQ, "If an account owner fails to withdraw the full amount of the RMD by the due date, the amount not withdrawn may be subject to an excise tax of 25%, 10% if the RMD is timely corrected within two years. The account owner should file Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, with their federal tax return for the year in which the full amount of the RMD was required, but not taken."

Since this will be Andrea's first RMD, she will have the option of taking her 2025 RMD in calendar year 2025 or in early 2026 (by April 1, 2026). The dollar amount of the RMD will be the same -- based on her SEP-IRA balance of Dec. 31, 2024. This timing is up to her. If she waits until the beginning of 2026 to take her 2025 RMD, her 2026 tax-year return will include her 2025 RMD and her 2026 RMD, which will be determined based on her Dec. 31, 2025, SEP-IRA balance. Andrea will need to get guidance from her tax adviser on timing.

Hope that helps.

By the way, I do welcome reader interaction. Email me (readers@juliejason.com) if you would like to participate in online surveys for the column or be invited to a presentation. If you have a question, send it to me. While not all reader questions can be answered, they are all read and considered for future columns.

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION

Recent announcements by the Social Security Administration (SSA) raise concerns about getting through to the SSA when you need to. The issue is the adoption of more strict procedures to protect your identity. Are they workable?

Visit or online: Individuals with a My Social Security online account could claim benefits online -- no problem. However, others were directed to visit a local Social Security office to prove their identity, according to a March 18 SSA blog post (tinyurl.com/2phde752). A telephone call was no longer an option.

This in-person procedure was to take effect March 31, 2025, following a two-week training period for employees, according to the blog. Concern about the new procedure prompted a change effective April 14 (see SSA blog of March 26, 2025 -- tinyurl.com/3ws8c3xu).

"We have listened to our customers, Congress, advocates, and others, and we are updating our policy to provide better customer service to the country's most vulnerable populations," said Lee Dudek, Acting Commissioner of Social Security.

Updated options: Visit, telephone or online. Under the updated policy, those applying for Social Security Disability Insurance (SSDI), Supplemental Security Income (SSI) or Medicare who "cannot use a personal My Social Security account can complete their claim entirely over the telephone," according to the March 26 blog.

Dudek said those categories "will be exempt from in-person identity proofing because multiple opportunities exist during the decision process to verify a person's identity."

A different rule applies to claims for retirement, survivor or auxiliary (spouse or child) benefits. SSA will still enforce online digital identity proofing or in-person identity proofing in those cases. However, the SSA "will not enforce these requirements in extreme dire-need situations."

The SSA has an updated webpage, "What to Know about Proving Your Identity" (tinyurl.com/mr47n57b), that provides details on ID information you'll need to make a claim.

Online version: The My Social Security account, found at ssa.gov/myaccount/, requires online identity proofing, something that was implemented last year for those who had created a Social Security account before Sept. 18, 2021 -- accounts created after that date already had the correct setup. (If you missed my column on the topic, email me for a copy.) You now must use one of the SSA's Credential Service Providers -- Login.gov or ID.me -- to access a My Social Security account.

The online account allows a user to manage benefits, get an estimate of future benefits, check the status of an application and request a replacement Social Security card.

Bank verification: The SSA is also implementing Account Verification Service (AVS), a payment integrity tool utilized by the Department of Treasury's Bureau of the Fiscal Service (tinyurl.com/2z52stfa). AVS "provides instant bank verification services to proactively and timely prevent fraud associated with direct deposit change requests," stated the SSA March 26 blog post.

Calling the SSA: The SSA typically receives about 80 million calls a year to its national 800 number. The SSA's "800 number performance" webpage provides updated statistics on the average speed of a call to be answered (21.2 minutes as of this writing), as well as callback and wait times (tinyurl.com/3ca8pyxm). According to the SSA, recent media reports that it is eliminating telephone service are inaccurate (tinyurl.com/2jrwtu8b). An office appointment can be scheduled by calling 800-772-1213 or by visiting the SSA website page "Looking for a local office?" (tinyurl.com/5n8ytwuz).

Scams: While Social Security-related scams have declined since fiscal year 2021, they "remain the top government imposter type reported to the [Federal Trade Commission]," according to the SSA Office of the Inspector General's Quarterly Scam Update released in March 2025 (tinyurl.com/28unumzm).

You can report potential Social Security fraud by going to the Office of the Inspector General's webpage at tinyurl.com/y25kr42b, or by calling the OIG fraud hotline at 800-269-0271. If you want to increase your awareness about the types of Social Security fraud, see the SSA's "Fraud Prevention and Reporting" webpage (tinyurl.com/yc4ar9tv).

Will the latest changes be workable for applicants and effective in combating Social Security fraud? Let me know if you have an opportunity to test the new guidelines (readers@juliejason.com).

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION

It's not unusual for parents to help their adult children, even if it means making a financial sacrifice. A 2024 Financial Independence Survey by Bankrate, a consumer financial services company, reported that 61% of parents or guardians "are currently sacrificing, or have sacrificed, financially to provide assistance to their adult children" (tinyurl.com/56rrubkk).

What if one child needs more help than another?

That's the question a reader asked via email recently: "I'm hoping you have some advice for seniors with assets on how to navigate sharing with and leaving those assets to two children with vastly different needs." The reader said that one child is self-sufficient, while the other works at a low-paying job and cannot afford to rent a place.

"How do we best use our resources ... to help the child who needs help without alienating the other one?" the reader wrote.

This challenge doesn't have a simple solution. There are a number of factors to consider.

Some advisers feel that unequal treatment can be a necessity but caution about creating dependency.

"For parents of adult children, it's ... OK to consider uneven spending when a child faces hard times," said Chris Warren in the Synchrony article "When Uneven Spending on Your Kids Is Right" (tinyurl.com/4djv53de). "But all financial professionals caution against allowing an adult child's short-term financial need to become long-term financial dependency."

Will other siblings suffer? Psychologist Jeffrey Bernstein, Ph.D., an author of seven books, wrote on the Psychology Today website: "Parents naturally want to help their struggling child, but this can create an imbalance where the needs of other siblings are overlooked" (tinyurl.com/ycykey72).

Should parents worry about imbalance or negative emotions?

"The impact on siblings of struggling adult children may be hidden or palpable," explained Bernstein. "Yet I repeatedly see these siblings struggle with resentment, jealousy, and stress."

In my personal experience working with high-net-worth families over three decades, I can tell you there is no simple answer about how to handle this situation, for good reason: Each family has its own "culture." Some are open about finances; some are not. Some teach their children that they are all equal in the eyes of the parents. Some encourage independence, while others encourage the opposite. Some teach that life is full of challenges that need to be overcome; others see challenges as unfair barriers to happiness.

Family dynamics will dictate interactions and outcomes.

Given that perspective, the real answer to the reader's question is to start with a self-assessment. Explore your own family culture. What are the standards you live by?

Consider this: If you were in the position of the child who couldn't pay his rent, how would you handle that? If you would seek help from your parents for yourself and expect equal financial support for your sibling, there is your answer. That puts your family culture in perspective.

Further, if you thought your sibling would feel an unequal arrangement would be unfair, how would you handle that?

At what point would you consider your parents' finances, specifically the financial sacrifices they make for their children? Would you feel their sacrifices are unfair to them?

My own view is that a retired couple can compromise their own financial safety by creating a fairness test when a child calls for help. My view is simple: Solve one problem at a time.

First, remember that you need to support yourself in retirement; you do not want to become dependent on someone else (your children, for example) in retirement.

Then, focus on the financially strapped child by helping him get work, offering rent-free shelter or lending money for rent payments under a note with interest. (If you lend money to buy a house, secure the debt with a mortgage.) Have your estate documents provide that the child's potential future inheritance be reduced by any outstanding debt.

Once that is settled, then and only then consider if your resolution created a second problem to solve: "fairness between siblings." Solve one problem at a time.

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION