Required Minimum Distributions (RMDs) and DST Planning

MARCH – DSTs FOR RETIREMENT + INCOME SERIES

Intro­duc­tion

For many retirees, the shift from accu­mu­la­tion to dis­tri­b­u­tion can feel like a sud­den change in finan­cial strat­e­gy. After decades of sav­ing in IRAs and 401(k)s, the IRS requires with­drawals whether the funds are need­ed or not. We are not pro­vid­ing tax advice, and all investors should seek con­sul­ta­tion with their own CPA. These Required Min­i­mum Dis­tri­b­u­tions (RMDs) often arrive at a time when investors would pre­fer to keep assets grow­ing or lim­it tax­able income.

March 13, 2026

By Al DiNi­co­la, AIF®
Adinicola@namcoa.com
Pri­vate Fund Advisor/DST 1031 Spe­cial­ist
NAMCOA® — Naples Asset Man­age­ment Com­pa­ny®, LLC
Secu­ri­ties offered through MSC-BD, LLC, Mem­ber of FINRA/SIPC

While DSTs are not a direct solu­tion for retire­ment accounts, the con­ver­sa­tion around DST and RMDs is grow­ing as retirees look for ways to bal­ance income, tax­es, and long-term invest­ment expo­sure. This is where real estate (and poten­tial­ly Delaware Statu­to­ry Trusts) can play a strate­gic sup­port­ing role. One of the con­cerns is UTBI (Unre­lat­ed Busi­ness Tax­able Income). Sim­ple def­i­n­i­tion would be a UTBI is income earned inside a tax-advan­taged account from an active trade or busi­ness that is unre­lat­ed to the account’s pur­pose. IRAs and 401(k)s are designed to hold pas­sive invest­ments, not oper­ate busi­ness­es. When they indi­rect­ly do, UTBI may apply. There may be a few DST that per­mit the acqui­si­tion being held in a retire­ment account. Invest­ments that cre­ate prob­lems for retire­ment accounts: Oper­at­ing busi­ness­es, Active part­ner­ships, Debt-financed real estate income (UDFI), Invest­ments issu­ing K‑1s with busi­ness income. If these exist, the account may owe tax­es and must file Form 990‑T. DST spon­sors know this and often design offer­ings specif­i­cal­ly to be retire­ment-account friend­ly. Giv­en the nature and illiq­uid­i­ty of the DST, RMDs can­not be tak­en from the actu­al DST. They would need to come from liq­uid assets in the IRA. We will have a future post and expand on the abil­i­ty for some qual­i­fied accounts to invest in DSTs.

Under­stand­ing the RMD Land­scape

Turn­ing 73 intro­duces a new finan­cial rhythm. Each year, retire­ment account hold­ers must with­draw a cal­cu­lat­ed min­i­mum amount from tax-deferred accounts. These with­drawals are taxed as ordi­nary income, regard­less of whether the cash is need­ed for liv­ing expens­es.

For some retirees, this cre­ates an unex­pect­ed chal­lenge. RMDs can increase tax­able income at a time when indi­vid­u­als may already be receiv­ing Social Secu­ri­ty, pen­sions, or invest­ment income. The result can be a high­er tax brack­et, increased Medicare pre­mi­ums, or a reduc­tion in tax plan­ning flex­i­bil­i­ty. The OBBB passed in mid-2025 also pro­vid­ed some tax relief for social secu­ri­ty income.

Key RMD real­i­ties include:

• Investors over 73 must with­draw a min­i­mum amount annu­al­ly
• With­drawals are taxed as ordi­nary income
• Under­stand­ing the cal­cu­la­tions
• Under­stand­ing poten­tial use of Qual­i­fied Char­i­ta­ble Dis­tri­b­u­tion (QCD)
• Excess with­drawals can push investors into high­er tax brack­ets

The ques­tion becomes less about whether RMDs will hap­pen and more about how to pre­pare for the tax impact they cre­ate.

Where DSTs Fit into Retire­ment Plan­ning

DSTs can­not be direct­ly pur­chased inside retire­ment accounts for §1031 exchange pur­pos­es. How­ev­er, they can be a pow­er­ful com­ple­ment to retire­ment income plan­ning. This is the essence of DST retire­ment plan­ning: align­ing tax­able and non-tax­able income sources to cre­ate a smoother finan­cial pic­ture.

Many retirees own invest­ment real estate out­side their retire­ment accounts. As prop­er­ty man­age­ment respon­si­bil­i­ties become bur­den­some, tran­si­tion­ing into DSTs allows them to main­tain real estate expo­sure while sim­pli­fy­ing their lifestyle. At the same time, the pas­sive income gen­er­at­ed by DSTs can be strate­gi­cal­ly used to sup­port RMD with­drawals.

This is how DST income sup­ports RMDs becomes a prac­ti­cal strat­e­gy.

Using DST Cash Flow to Sup­port With­drawals

Instead of with­draw­ing retire­ment funds and imme­di­ate­ly need­ing to spend them, retirees can coor­di­nate income streams. DSTs can gen­er­ate pas­sive month­ly or quar­ter­ly dis­tri­b­u­tions that help cov­er the tax oblig­a­tions cre­at­ed by RMDs.

This inte­gra­tion pro­vides sev­er­al plan­ning ben­e­fits:

1. Pas­sive Cash Flow to Cov­er RMD Tax­es

DST dis­tri­b­u­tions can pro­vide income that helps pay the tax­es trig­gered by IRA with­drawals. Rather than sell­ing oth­er invest­ments or draw­ing down sav­ings, retirees can use real estate income to sup­port required with­drawals.

2. Strate­gic Asset Allo­ca­tion

By shift­ing active­ly man­aged prop­er­ties into DSTs, retirees may reduce unex­pect­ed expens­es, large cap­i­tal events, or oper­a­tional stress. This cre­ates more pre­dictabil­i­ty in cash flow and helps sta­bi­lize over­all retire­ment income.

3. Tax-Effi­cient Income Plan­ning

Coor­di­nat­ing real estate income with retire­ment with­drawals helps cre­ate a diver­si­fied income strat­e­gy. This approach reflects a broad­er DST strat­e­gy for tax-effi­cient retire­ment, bal­anc­ing mul­ti­ple income sources instead of rely­ing sole­ly on retire­ment accounts.

Impor­tant Con­sid­er­a­tions

While DSTs offer com­pelling ben­e­fits, thought­ful plan­ning is essen­tial.

Retirees should:

• Coor­di­nate close­ly with a CPA or finan­cial advi­sor
• Align DST dis­tri­b­u­tion sched­ules with RMD time­lines
• Under­stand liq­uid­i­ty lim­i­ta­tions of DST invest­ments

DSTs are long-term invest­ments and are not designed for imme­di­ate liq­uid­i­ty. The goal is to cre­ate con­sis­tent, pas­sive income that com­ple­ments retire­ment with­drawals, not replace retire­ment accounts.  DSTs in tax­able accounts are pri­mar­i­ly about: Tax defer­ral plus land­lord exit strat­e­gy.  DSTs in retire­ment accounts are pri­mar­i­ly about: Diver­si­fi­ca­tion and pas­sive income. Under­stand­ing this dis­tinc­tion is key to using DSTs effec­tive­ly in a well-round­ed finan­cial plan.

NAMCOA® is a SEC reg­is­tered invest­ment advi­so­ry firm that pro­vides com­pre­hen­sive port­fo­lio man­age­ment, finan­cial plan­ning, and fidu­cia­ry deci­sion-mak­ing ser­vices on behalf of retire­ment plan spon­sors. Our Dif­fer­ence is sum­ma­rized by our fidu­cia­ry approach which enables us to bet­ter meet port­fo­lio and retire­ment plan objec­tives, result­ing in stronger risk adjust­ed returns for investors and peace of mind for Clients. We also focus on alter­na­tive real estate invest­ment. Many real estate investors are seek­ing tax deferred solu­tions uti­liz­ing §1031 exchanges or Oppor­tu­ni­ty Zones.

DSTs are not for all investors.  The acqui­si­tion of a DST is for accred­it­ed investors only.  Con­tact your invest­ment advis­er for addi­tion­al details on how a DST may be a solu­tion to your 1031 Exchange and suit­ed for your invest­ment future. For more infor­ma­tion on how to prop­er­ly set up an IRC 1031Tax Deferred Exchange or if you are an accred­it­ed investor and would like addi­tion­al infor­ma­tion on a DST con­tact Al DiNi­co­la at 239–691-8098 or email adinicola@namcoa.com.

This is not an offer to pur­chase or solic­i­ta­tion to pur­chase any secu­ri­ty, as such be made only through an offer­ing mem­o­ran­dum or prospec­tus.  Invest­ing in secu­ri­ties, real estate, or any invest­ment, whether pub­lic or pri­vate, involves risk, includ­ing but not lim­it­ed to the poten­tial of los­ing some or all of your invest­ment dol­lars when you invest in secu­ri­ties. You should review any planned finan­cial trans­ac­tions that may have tax or legal impli­ca­tions with your per­son­al tax or legal advi­sor.   NAMCOA, LLC is a Reg­is­tered Invest­ment Advi­sor, reg­u­lat­ed by SEC (Secu­ri­ties and Exchange Com­mis­sion). Our cor­po­rate office is locat­ed at 999 Van­der­bilt Beach Road, Suite 200, Naples Flori­da 34108. Secu­ri­ties Offered through MSC-BD, LLC, Mem­ber of FINRA/SIPC, 5 Cen­ter­pointe Dri­ve, Ste. 400 Lake Oswego, OR, 97035.  MSC-BD, LLC and NAMCOA are inde­pen­dent­ly owned and are not affil­i­at­ed.

Thank you.