For Many Seniors, an Ominous Retirement-Account Deadline

In the absence of a clear sign that the Treasury or Congress will move on this before the end of this year, I turned to some financial advisers to offer Rao tips on what he can do to soften the blow.

Mike Martin, founder and president of Mike Martin & Associates in Independence, Mo., said Rao should wait until mid- to late December to withdraw any of the money "if it is believed that the markets will go up from here to then." And some people do believe that will be the case.

Nicholas Yrizarry, founder of Nicholas Yrizarry & Associates in Reston, said Rao should ask if he can take his RMD as shares from his funds rather than in cash. He can then sell those shares when the values recover rather than do so at such a low point, Yrizarry said. However, many plan providers do not offer that as an option. "It wouldn't hurt to ask," Yrizarry said.

Chris Reilly, senior vice president with Firstrust Financial Resources in Philadelphia, said Rao should also take a closer look at his retirement plans. "The 35 percent decline suggests predominately stock funds," he said.

Yrizarry agreed that Rao's portfolio seemed too stock-heavy for a person his age. "The rule of thumb is to have less exposure to the stock market as a client gets older to mitigate this kind of problem," he said.

Rao said his mutual funds are 70 percent in stocks and 30 percent in bonds. He said he realizes that is a problem. "I am thinking of reallocating the funds as 50 percent in stocks and bonds respectively," he said.

Not so fast, Yrizarry said. "I wouldn't suggest that he reallocate his portfolio 50-50 at this time because this would mean that he's selling stocks while they're low and buying bonds while they're higher," he said. "Before revamping his asset allocation, it would make sense to do a more in-depth analysis of his tolerance for risk, cash-flow needs and his other pending household expenses."

And who knows? Maybe the Treasury or Congress will step in with some relief.