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Question on RMDs
Old 10-11-2016, 04:44 PM   #1
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Question on RMDs

My birthday is at the end of August, so my first RMD would be taken by the following year, the year in which I turn 70.5. MUST I take two in that following year or may I take one the same year in which I turn 70 and have it count as the first RMD?

I am trying to avoid having two in the same year if at all legally possible, so I don't have too much taxable income one year.

Thank you in advance. This whole thing seems confusing to me, I don't know why. I guess I am afraid of doing things wrong and incurring a huge penalty.
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Old 10-11-2016, 04:57 PM   #2
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https://www.irs.gov/retirement-plans...istributions#3

Quote:
You must take your first required minimum distribution for the year in which you turn age 70. However, the first payment can be delayed until April 1 of the year following the year in which you turn 70. For all subsequent years, including the year in which you were paid the first RMD by April 1, you must take the RMD by December 31 of the year.
No need to take two distributions in a single year.
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Old 10-11-2016, 05:00 PM   #3
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The rmd process starts the year you turn 70.5. So that would be your first year and it is done on a per year basis. I believe you can delay paying the first one until early the following year but that's not something I would do.

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Old 10-11-2016, 05:16 PM   #4
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It can get tricky,depending what month your birthday falls in. I was bron in May, so I was 70.5 in November, and I took my first RMD that year. My wife was born in December, so she would have been 70.5 in June, andd 71 in December, making 2 distributions.
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Old 10-11-2016, 05:21 PM   #5
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she would have been 70.5 in June, andd 71 in December, making 2 distributions.
No, actually her first RMD would be in the year she turned 70.5.
The next RMD would be the following year; turning 71 has nothing to do with it.
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Old 10-11-2016, 05:22 PM   #6
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Originally Posted by Souschef View Post
It can get tricky,depending what month your birthday falls in. ....My wife was born in December, so she would have been 70.5 in June, andd 71 in December, making 2 distributions.
Not tricky at all. See the quote from the IRS website in post #2 above.

I have a December birthday and will turn 70.5 next June. I take my first RMD next year, and then one each subsequent year.
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Old 10-11-2016, 05:31 PM   #7
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From what REWahoo quoted above in post #2, it sounds to me like Weedwatcher doesn't have to withdraw an RMD twice in one year.

I will be 70+1/2 in December, 2018. So, that makes it simpler I suppose. I'll be withdrawing an RMD in 2018, another in 2019, and so on.
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Old 10-11-2016, 05:34 PM   #8
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Simple. It's one per year, starting in the year you turn 70.5. It's that simple in most cases.

I'll be 70 1/2 in April 2036 (God willing). So that will be the first year I am required to take an RMD. I don't have to take another one in 2036 even though I'd turn 71 later that year. One per year starting with the year in which you turn 70 1/2. That said, we will probably be taking distributions from it before then, but you never know.
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Old 10-11-2016, 08:00 PM   #9
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So what's up with 70.5? Who ever measures age in half year increments?

And doesn't the IRS have some crazy rule about people born on Jan 1?

No one else does this for anything, your birthday is your birthday, and age is measured in years - why is it different in these cases?

-ERD50
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Old 10-11-2016, 08:19 PM   #10
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Originally Posted by ERD50 View Post
So what's up with 70.5? Who ever measures age in half year increments?

And doesn't the IRS have some crazy rule about people born on Jan 1?

No one else does this for anything, your birthday is your birthday, and age is measured in years - why is it different in these cases?

-ERD50
Actually, it used to be (and probably still its) that insurance companies considered you the next year's age at the previous age plus 6 months. SO using the RMD scenario, when you turn 70 1/2, the insurance company considers you (for the purpose of underwriting/actuarally) to be 71. No reason, just their, er, uh, "policy." YMMV
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Old 10-11-2016, 08:25 PM   #11
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It's just like penalty free IRA at yes, fifty-nine and a half.
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Old 10-11-2016, 08:26 PM   #12
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Oh, while we are on the subject of RMDs (next year I'll reach 70 1/2) do most (or all) IRA/401(k) etc. company send a statement stating 1) Dec. 31 balance in qualified plans 2) how much you will owe based on age/gummint RMD factor 3) other My guess is they only send the balance and you have to figure out the amount to withdraw, but I was hoping... Of course, since there are permutations of the system (like a much younger spouse...) it probably makes more sense just to send the info on balance as of Dec. 31.

Anyone know any more detail than this??

Thanks in advance. So looking forward to this time in my life when I get to pay back my generous uncle for all his kindness, blah, blah, blah....
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Old 10-11-2016, 08:42 PM   #13
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Both USAA and Vanguard will compute it for you. Don't know about others but can't imagine it isn't available from other major financial institutions.
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Old 10-11-2016, 08:52 PM   #14
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Both USAA and Vanguard will compute it for you. Don't know about others but can't imagine it isn't available from other major financial institutions.
Fidelity does as well (I help manage this for my MIL). I think I even saw this computed for my Mom, from her home town small bank IRA.

If you don't have all your IRA money in one place, it will either need to be accounted for, or each calculated and withdrawn relative to the amount in that account (so the total is the same). While things were in flux for my MIL as we consolidated, Fidelity let you calculate and enter the RMDs for accounts on the outside. I'd guess all the big places offer this.

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Old 10-11-2016, 10:27 PM   #15
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Every institution I have an IRA or 401K with (4) sends me a detailed statement of the amount I am required to take as a RMD based on their year ending figures. Generally, these are sent to me around February.
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Old 10-11-2016, 11:12 PM   #16
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The TSP makes sure that your RMD's are withdrawn:

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If you do not withdraw your account balance or begin receiving payments from your account in the year you turn 70, the TSP is required to make the required distribution to you by April 1 of the following year.
[...]
If you are already receiving a series of monthly payments from your TSP account when you turn 70, your monthly payments will be used to satisfy the IRS minimum distributions requirement. If the total amount of your monthly payments does not satisfy the requirement, the TSP will issue a supplemental payment for the remaining amount in December.
https://www.tsp.gov/PlanParticipatio...tions.html#rmd
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Old 10-12-2016, 12:18 AM   #17
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One thing that I do is to make direct charitable donations from my IRA account. They are counted against your RMD, but you are not taxed on them.
If you normally make charitable contributions, this is a good deal.
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Old 10-12-2016, 12:43 AM   #18
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One thing that I do is to make direct charitable donations from my IRA account. They are counted against your RMD, but you are not taxed on them.
If you normally make charitable contributions, this is a good deal.
Thanks for that info, Souschef. I will have all my tax deferred accounts consolidated at vanguard soon (one trad IRA for rollovers and one not plus a ROTH). Is there an IRS document you can refer me to for how to document such charitable contributions?
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Old 10-12-2016, 01:11 AM   #19
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Originally Posted by mamadogmamacat View Post
Thanks for that info, Souschef. I will have all my tax deferred accounts consolidated at vanguard soon (one trad IRA for rollovers and one not plus a ROTH). Is there an IRS document you can refer me to for how to document such charitable contributions?
Yes, it was good that Souschef brought up the charitable contribution direct from IRA info......

But I believe that if you do your charitable giving via direct transfer from your IRA, those contributions will no longer be deductible on your taxes. Sadly, you don't get it both ways....... For example, if you now give your alma mater $5K/YR and deduct that $5k on your taxes and switch to having $5k distributed to your alma mater directly from your IRA (reducing the RMD you must take) you don't get to also deduct the $5k from your taxes. So, keep that in mind too.
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Old 10-12-2016, 06:45 AM   #20
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That's right. Not deductible, but the advantage to a QCD is that it won't add to your AGI. IRS Pub 590-B has the details.

Quote:
How do I report a qualified charitable distribution on my income tax return?

To report a qualified charitable distribution on your Form 1040 tax return, you generally report the full amount of the charitable distribution on the line for IRA distributions. On the line for the taxable amount, enter zero if the full amount was a qualified charitable distribution. Enter "QCD" next to this line. See the Form 1040 instructions for additional information.

You must also file Form 8606, Nondeductible IRAs, if:
  • you made the qualified charitable distribution from a traditional IRA in which you had basis and received a distribution from the IRA during the same year, other than the qualified charitable distribution; or
  • the qualified charitable distribution was made from a Roth IRA.
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