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Dow Incorporated Employees: Should You Delay Your RMD When the S&P 500 Is Down?

Dow Incorporated employees should carefully time their Required Minimum Distributions (RMDs) to avoid selling assets at reduced prices during market downturns, as strategic withdrawal planning can help preserve future portfolio growth and minimize unnecessary tax burdens. – Michael Corgiat, a representative of The Retirement Group, a division of Wealth Enhancement Group.

Dow Incorporated employees should consider the impact of market volatility on their RMD strategies, as delaying withdrawals during market downturns can allow for potential recovery, helping to protect long-term retirement assets and minimize tax exposure. – Brent Wolf, a representative of The Retirement Group, a division of Wealth Enhancement Group.

In this article, we will discuss:

Impact of market fluctuations on RMD timing strategies
Differences between RMDs and Roth IRA conversions
Portfolio composition and tax-efficient approaches for Dow Incorporated retirees

Navigating RMDs Amid Market Volatility

Market fluctuations can complicate income planning for retirees relying on distributions from retirement accounts. As of 2025, the IRS requires individuals aged 73 and older to take annual RMDs from tax-deferred accounts like 401(k)s and traditional IRAs. The RMD amount is calculated based on the account balance as of December 31 of the previous year, divided by a life expectancy factor provided by the IRS. Younger Dow Incorporated retirees, while not subject to RMDs, may still need to make withdrawals to cover living expenses.

Historically, many have delayed their RMDs until year-end to better assess their annual income and potentially minimize tax implications. Others opt for monthly or quarterly distributions. However, with current market volatility affecting major indices like the Dow Jones Industrial Average, Nasdaq, and S&P 500, the timing of these withdrawals has become more consequential.

Challenges of Fixed RMD Calculations During Market Downturns

A key issue is that RMD calculations are based on the account value at the end of the previous year and do not adjust for market declines that may occur afterward. For instance, if a retiree's IRA was valued at $850,000 on December 31, 2024, their 2025 RMD would be approximately $33,000. If the market value drops to $790,000 by April 2025, the retiree is still obligated to withdraw the full $33,000, potentially requiring the sale of more shares at reduced prices.

Pam Krueger, founder of Wealthramp, highlights this predicament: Selling assets at reduced prices to meet a withdrawal requirement based on a higher previous value can be a double-edged sword.

Distinguishing Between RMDs and Roth IRA Conversions

A common misconception is treating RMDs and Roth IRA conversions similarly. While converting funds from a traditional IRA to a Roth IRA during market lows can be advantageous due to tax-free growth potential, RMDs involve mandatory withdrawals that are taxed and, if reinvested, may be subject to capital gains taxes.

George Gagliardi, a certified financial adviser in Massachusetts, advises handling RMDs and Roth conversions as separate strategies. He suggests using more stable assets, like short-term bonds, for RMDs to minimize the impact of market volatility, while reserving assets with higher growth potential for Roth conversions.

Importance of Portfolio Composition

The structure of a retirement portfolio significantly influences RMD strategies. Diversified portfolios typically include a mix of cash, bonds, stocks, and short-term securities. Rob Williams, managing director of financial planning at Schwab, emphasizes viewing the portfolio as a collection of distinct assets rather than a single entity.

Portfolios with low-volatility assets, such as Treasury bonds or short-term CDs, can provide liquidity for RMDs without necessitating the sale of equities during downturns. Implementing bond ladders with staggered maturity dates can help align asset availability with RMD schedules.

Considerations for Inherited IRAs

Inherited IRAs present additional complexities. Non-spouse beneficiaries are required to deplete the account within ten years, with RMDs enforced throughout this period. All distributions are taxed as ordinary income. B Capital

Scott Bishop, a Texas-based money manager, encountered a client contemplating early withdrawals from an inherited IRA due to market declines. He suggests a hybrid approach: withdrawing funds (after taxes) and reinvesting them in a taxable brokerage account. This strategy may result in future gains being taxed at lower capital gains rates, potentially reducing the overall tax burden.

Timing RMDs Strategically

While market volatility adds complexity to RMD timing, thoughtful planning remains essential. Since the RMD amount is fixed based on the previous year's account value, retirees have the opportunity to choose when to take distributions. Delaying withdrawals can allow for potential market recovery and defer associated taxes.

Pam Krueger advises against hastily selling assets during market lows, suggesting that waiting can provide both tax deferral and the chance for account value recovery.

Final Thoughts

In uncertain markets, it's important to resist impulsive decisions. The approach to accessing retirement funds—whether through RMDs, inherited IRA withdrawals, or broader income strategies—should focus on minimizing losses and maintaining portfolio value. For Dow Incorporated retirees, this means adopting a methodical approach to withdrawals, utilizing diversified portfolios with components like cash reserves, short-term bonds, and strategically structured ladders to meet distribution needs without compromising future growth.

A Vanguard report from December 2023 indicates that taking RMDs later in the year has historically correlated with higher average portfolio values, as markets often recover from mid-year volatility. In years with presidential elections, the S&P 500 has averaged gains of 7.3% in the second half, suggesting that postponing RMDs may provide more favorable conditions for asset sales.

Analogy

Withdrawing your RMD during a market downturn is akin to selling your home during a housing slump because you must relocate; you may receive less than if you had waited for the market to rebound. By carefully timing withdrawals, retirees can retain more of their investment assets, similar to homeowners waiting for a seller's market. This is especially pertinent when mandatory distributions are based on higher account values from the previous year, regardless of current performance.

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Source:

1. Royal, James. How Required Minimum Distributions Impact Your Traditional IRA Balance. Investopedia , 15 Apr. 2025, www.investopedia.com/required-minimum-distributions-ira-impact-5185475 .

2. Riquier, Andrea. Should I Rush to Take My RMD While the S&P 500 Is Down, or Wait Until the End of the Year Like Normal? MarketWatch , 12 Apr. 2025, www.marketwatch.com/rmd-timing-strategy-s-p-500-2025-5183472 .

3. RMD Strategies to Help Ease Your Tax Burden. Charles Schwab , Jan. 2025, www.schwab.com/rmd-tax-strategy-planning-2025 .

4. Inherited IRAs: What to Know About Taxes, RMDs, and More. Morningstar , Mar. 2025, www.morningstar.com/inherited-iras-rmd-tax-implications-2025 .

5. RMD Strategies for Wealthy Retirees: 2025 Tax Planning Guide. RCS Planning , Mar. 2025, www.rcsplanning.com/rmd-strategies-tax-planning-wealthy-retirees-2025 .

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The Dow Chemical Company’s pension plan and retirement ages: The Dow Chemical Company’s pension plan structure impacts employees' retirement benefits based on their retirement age. Retiring earlier results in lower monthly payments due to reduced service time and potential early commencement penalties, while working longer allows for more service accrual and higher monthly benefits. Employees must evaluate how these factors align with personal retirement goals, as choosing to retire early might not provide as much financial security as delaying retirement(The Dow Chemical Compan…).

What are the implications of the 20% mandatory withholding tax on lump-sum distributions from The Dow Chemical Company's pension plan, and how does the option to roll over affect an employeeâ€™s tax situation? Employees taking lump-sum distributions need to be cautious about this withholding rule as it can impact their immediate financial needs. Additionally, the rollover option provides a strategy to defer taxes, which can be crucial for long-term financial health. Employees should consider how to best utilize these rules in their personal financial planning.

20% mandatory withholding tax on lump-sum distributions: Lump-sum distributions from The Dow Chemical Company’s pension plan are subject to a 20% mandatory withholding tax if not directly rolled over into another qualified retirement plan. This tax can significantly impact an employee's immediate finances. However, opting to roll over the lump sum to a qualified plan defers taxation until funds are withdrawn, allowing employees to manage their tax liabilities better while continuing to grow their retirement savings(The Dow Chemical Compan…).

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Eligibility for retirement benefits: The Dow Chemical Company outlines eligibility for pension benefits based on a combination of service years and age. Typically, employees become vested after three years of service or upon reaching age 65 while still employed. The company ensures that employees are informed about these eligibility criteria through various resources, such as the Dow Benefits Service Center, enabling them to make informed retirement decisions(The Dow Chemical Compan…).

In what ways can employees of The Dow Chemical Company appeal decisions regarding their pension benefits, and what processes are in place to facilitate these appeals? The appeal process is critical for employees who might feel that their benefits have not been administered correctly. Understanding the correct procedures and having access to the right resources can empower employees to effectively advocate for themselves in the face of administrative decisions.

Appealing pension benefit decisions: If employees believe there has been an error in the administration of their pension benefits, The Dow Chemical Company provides a formal appeal process. Employees can file a claim, and if denied, they have the right to appeal the decision. The Retirement Board oversees these appeals, and employees must follow the outlined procedures for their appeal to be considered(The Dow Chemical Compan…).

What strategies can employees of The Dow Chemical Company employ to maximize their pension benefits while transitioning to retirement? Employees must navigate complexities such as contribution limits, benefit formulas, and personal retirement savings. A strategic approach, which includes understanding the timing of retirement and how it interacts with pension claims, can lead to more favorable financial outcomes in their retirement years.

Maximizing pension benefits: Employees at The Dow Chemical Company can maximize their pension benefits by carefully planning their retirement timing. Key strategies include working longer to accrue more service years, reviewing contribution limits, and understanding the benefit formula used. Aligning personal savings and pension claims with the optimal retirement age can result in more favorable financial outcomes(The Dow Chemical Compan…).

How can retirees from The Dow Chemical Company navigate survivor benefits, and what are the eligibility criteria for spouses or domestic partners? Survivor benefits are an essential aspect of retirement planning, especially for employees concerned about providing for their loved ones after death. Itâ€™s vital for employees to understand both eligibility and what benefits their partners might receive, fostering peace of mind during retirement planning endeavors.

Survivor benefits for retirees: Retirees from The Dow Chemical Company can opt for survivor benefits to provide financial security for their spouses or domestic partners. Eligibility for these benefits depends on the plan's structure, and employees should understand the options available to ensure their loved ones are covered after their death. These benefits include continued monthly payments or lump-sum options depending on the election made at retirement(The Dow Chemical Compan…).

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Comparing defined benefit pension plan: The Dow Chemical Company offers a defined benefit pension plan, which differs from defined contribution plans like 401(k)s. In a defined benefit plan, the company guarantees a specific monthly benefit upon retirement, typically based on years of service and salary, whereas defined contribution plans depend on employee contributions and investment performance(The Dow Chemical Compan…).

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Resources for retirement information: The Dow Chemical Company provides several resources for employees to access detailed information about their retirement options. The Dow Benefits Service Center and My HR Connection are key tools where employees can request pension estimates, understand payment options, and clarify eligibility criteria. These resources help employees make informed decisions regarding their retirement planning(The Dow Chemical Compan…).

With changes in IRS rules becoming increasingly relevant, how do employees of The Dow Chemical Company stay informed about updates that may impact their retirement savings? Employees need to be active participants in their retirement planning by staying abreast of legal and regulatory changes that can influence their financial strategies. Having a clear understanding of these regulations can help ensure compliance while maximizing possible financial benefits under updated laws.

Staying informed about IRS rules: Employees of The Dow Chemical Company must stay informed about IRS rules that may affect their retirement savings. Changes in tax laws, contribution limits, or distribution rules can significantly impact financial planning. The company provides updates and resources to ensure employees are aware of relevant regulatory changes that might affect their retirement strategies(The Dow Chemical Compan…).

How can employees of The Dow Chemical Company reach the benefits service center for additional inquiries regarding their pension plan, and what information should they prepare beforehand? Knowing how to contact the benefits service center is crucial for employees seeking clarity on their pension plan benefits. Preparing relevant information ahead of time can streamline the process, allowing for a more productive engagement with benefits specialists and ensuring that employees receive precise guidance tailored to their situations.

Contacting the benefits service center: Employees seeking clarification about their pension benefits can reach the Dow Benefits Service Center via phone or online through the Message Center. It is recommended to have personal identification and details of the pension plan ready to streamline the inquiry process. Proper preparation ensures a productive conversation with benefits specialists(The Dow Chemical Compan…).

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For more information you can reach the plan administrator for Dow Incorporated at 1919 torrance blvd Torrance, CA 90501; or by calling them at 900-999-1009.