Making Sense of the Alphabet Soup

Financial planning is full of acronyms—RMDs, QCDs, TODs, IRAs—and at first glance, it can feel like a confusing bowl of alphabet soup. But once you understand what these letters stand for, they become practical tools that help you manage your money, reduce taxes, and make sure your loved ones are protected. Let’s break down a few of the most important ones.

The IRA Foundation

Many of these rules start with your Individual Retirement Account (IRA). Traditional IRAs let your money grow tax-deferred, meaning you don’t pay taxes until you withdraw it. Roth IRAs are funded with after-tax money, but withdrawals are tax-free. IRAs are the cornerstone of many retirement plans, and the rules surrounding them guide how you use your savings later in life.

RMDs – Required Minimum Distributions

At age 73, the IRS requires you to begin taking money out of your Traditional IRA or other tax-deferred accounts. These Required Minimum Distributions (RMDs) are taxed as ordinary income. Planning ahead is critical, because large withdrawals can bump you into a higher tax bracket, affect Social Security taxation, or even raise Medicare premiums.

QCDs – Qualified Charitable Distributions

For those who are 70½ or older, a Qualified Charitable Distribution (QCD) is a tax-smart way to give. You can donate up to $100,000 directly from your IRA to a qualified charity, and the amount counts toward your RMD. The bonus? It doesn’t increase your taxable income. For retirees who want to give back, this strategy allows you to support causes you love while lowering your tax bill.

TODs – Transfer on Death

Estate planning often feels complicated, but a Transfer on Death (TOD) designation keeps things simple. By naming a beneficiary on your bank or brokerage account, that asset goes directly to them when you pass—bypassing probate. It’s a straightforward way to ensure your money gets where you want it to go without unnecessary delays or expenses.

Contingent Beneficiaries – Your Backup Plan

Just as important as naming a primary beneficiary is naming contingent beneficiaries. These are your backups—the people who inherit if your primary beneficiary cannot. Without them, your assets could end up tied up in probate or passed in ways you didn’t intend. Reviewing and updating your beneficiaries regularly is an easy but powerful way to keep your plan current.

The Bottom Line

When you put it together, the alphabet soup starts to make sense:

RMDs keep your retirement withdrawals on track.

QCDs let you give generously and save on taxes.

TODs simplify your estate plan.

Contingent beneficiaries make sure nothing falls through the cracks.

At Fourth Avenue Financial, we help you see through the acronyms and build a retirement plan that works for your life. With the right strategy, these letters become less intimidating and more like a recipe for financial peace of mind.

Securities offered through J.W. Cole Financial, Inc. Member FINRA/SIPCwww.finra.org and www.sipc.orgAdvisory services offered through J.W. Cole Advisors, Inc.J.W. Cole Financial, Inc., J.W. Cole Advisors, Inc., and Fourth Avenue Financial are unaffiliated entities.