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10-11-2016, 03:44 PM
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#1
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Confused about dryer sheets
Join Date: Sep 2016
Location: Raleigh
Posts: 6
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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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10-11-2016, 03:57 PM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,004
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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 70½. However, the first payment can be delayed until April 1 of the year following the year in which you turn 70½. 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.
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No need to take two distributions in a single year.
__________________
Numbers is hard
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10-11-2016, 04:00 PM
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#3
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Thinks s/he gets paid by the post
Join Date: Apr 2008
Posts: 1,246
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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.
Sent from my XT1575 using Early Retirement Forum mobile app
__________________
"Don't you draw the queen of diamonds, boy, she'll beat you if she's able.
You know the queen of hearts is always your best bet" -- The Eagles, Desperado
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10-11-2016, 04:16 PM
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#4
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Thinks s/he gets paid by the post
Join Date: Dec 2015
Location: Santa Paula
Posts: 4,070
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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.
__________________
Retired Jan 2009 Have not looked back.
AA 60/35/5 considering SS and pensions a SP annuity
WR 2% with 2SS & 2 Pensions
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10-11-2016, 04:21 PM
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#5
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Moderator
Join Date: Feb 2010
Location: Flyover country
Posts: 25,198
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Quote:
Originally Posted by Souschef
she would have been 70.5 in June, andd 71 in December, making 2 distributions.
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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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10-11-2016, 04:22 PM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,004
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Quote:
Originally Posted by Souschef
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.
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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.
__________________
Numbers is hard
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10-11-2016, 04:31 PM
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#7
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Moderator Emeritus
Join Date: Jan 2007
Location: New Orleans
Posts: 47,473
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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.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities. - - H. Melville, 1851.
Happily retired since 2009, at age 61. Best years of my life by far!
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10-11-2016, 04:34 PM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
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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.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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10-11-2016, 07:00 PM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,821
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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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10-11-2016, 07:19 PM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 17,794
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Quote:
Originally Posted by ERD50
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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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
__________________
Ko'olau's Law -
Anything which can be used can be misused. Anything which can be misused will be.
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10-11-2016, 07:25 PM
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#11
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2016
Posts: 8,968
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It's just like penalty free IRA at yes, fifty-nine and a half.
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10-11-2016, 07:26 PM
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#12
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 17,794
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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....
__________________
Ko'olau's Law -
Anything which can be used can be misused. Anything which can be misused will be.
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10-11-2016, 07:42 PM
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#13
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,004
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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.
__________________
Numbers is hard
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10-11-2016, 07:52 PM
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#14
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,821
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Quote:
Originally Posted by REWahoo
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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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.
-ERD50
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10-11-2016, 09:27 PM
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#15
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Moderator Emeritus
Join Date: Apr 2011
Location: Conroe, Texas
Posts: 18,645
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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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*********Go Astros!*********
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10-11-2016, 10:12 PM
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#16
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Moderator Emeritus
Join Date: Jan 2007
Location: New Orleans
Posts: 47,473
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The TSP makes sure that your RMD's are withdrawn:
Quote:
If you do not withdraw your account balance or begin receiving payments from your account in the year you turn 70½, 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 70½, 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.
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https://www.tsp.gov/PlanParticipatio...tions.html#rmd
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities. - - H. Melville, 1851.
Happily retired since 2009, at age 61. Best years of my life by far!
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10-11-2016, 11:18 PM
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#17
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Thinks s/he gets paid by the post
Join Date: Dec 2015
Location: Santa Paula
Posts: 4,070
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QCD
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.
__________________
Retired Jan 2009 Have not looked back.
AA 60/35/5 considering SS and pensions a SP annuity
WR 2% with 2SS & 2 Pensions
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10-11-2016, 11:43 PM
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#18
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Full time employment: Posting here.
Join Date: Dec 2012
Posts: 751
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Quote:
Originally Posted by Souschef
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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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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10-12-2016, 12:11 AM
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#19
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2005
Location: Chicago
Posts: 13,151
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Quote:
Originally Posted by mamadogmamacat
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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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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"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
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10-12-2016, 05:45 AM
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#20
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Moderator
Join Date: Feb 2010
Location: Flyover country
Posts: 25,198
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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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