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Old 04-14-2016, 07:53 PM   #41
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You don't need to set quarterly RMD payments, just do it in Dec. Unlike estimated payment, withholding doesn't have to be "timely." You can withhold your entire year's tax obligation on Dec 31st.
I may be misunderstanding you, or the situation I'm describing is different from what you are covering - I was thinking in terms of having my entire tax obligation covered by just the RMD withholding.

IOW, I might have income from dividends (with no withholding) in all 4 quarters. In that case, if my only withholding was from the RMD in Dec, might I run afoul of IRS regs? My thinking was, spread it out evenly over the 4 quarters, and it would be close enough to actual income to stay in the guidelines?

I understand that I can do the RMD in Dec, and if I withhold a proper amount to cover taxes on the RMD, that's fine. But I thought that would not cover me for any additional taxes due in Q 1-3?

edit/add: OK, so by saying this "Unlike estimated payment, withholding doesn't have to be "timely."" you are saying that Dec w/h would apply to all other tax obligations in any quarter?

-ERD50
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Old 04-14-2016, 08:00 PM   #42
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Some folks withhold the entire RMD if needed and allowed.
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Old 04-14-2016, 10:32 PM   #43
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edit/add: OK, so by saying this "Unlike estimated payment, withholding doesn't have to be "timely."" you are saying that Dec w/h would apply to all other tax obligations in any quarter?

-ERD50
Yes. To my understanding est payments must be timely but not withholding..
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Old 04-15-2016, 05:21 AM   #44
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Originally Posted by ERD50 View Post
I may be misunderstanding you, or the situation I'm describing is different from what you are covering - I was thinking in terms of having my entire tax obligation covered by just the RMD withholding.

IOW, I might have income from dividends (with no withholding) in all 4 quarters. In that case, if my only withholding was from the RMD in Dec, might I run afoul of IRS regs? My thinking was, spread it out evenly over the 4 quarters, and it would be close enough to actual income to stay in the guidelines?

I understand that I can do the RMD in Dec, and if I withhold a proper amount to cover taxes on the RMD, that's fine. But I thought that would not cover me for any additional taxes due in Q 1-3?

edit/add: OK, so by saying this "Unlike estimated payment, withholding doesn't have to be "timely."" you are saying that Dec w/h would apply to all other tax obligations in any quarter?

-ERD50
My understanding, yes. Which is why people favor it. We're not obligated to take RMDs yet, so haven't done this.
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Old 04-15-2016, 07:01 AM   #45
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Yes. To my understanding est payments must be timely but not withholding..
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My understanding, yes. Which is why people favor it. We're not obligated to take RMDs yet, so haven't done this.
Thanks, now I just need to file this away for ~ 9 years!

-ERD50
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Old 04-15-2016, 04:16 PM   #46
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My understanding, yes. Which is why people favor it. We're not obligated to take RMDs yet, so haven't done this.

We haven't started RMD's yet either, but it's on the immediate horizon (2017 and 2018) so we've been busy asking questions when opportunities arise.

Currently we make quarterly est tax payments to cover the taxes on investment income and my SS. Our tentative plan is not to make est tax payments beginning in 2017. In that year, I'll sit down in Nov and do a pro-forma on our taxes and determine how much to withhold from DW's RMD to cover taxes on the RMD itself and also SS and investment income. Then, pull the trigger on the RMD.

Schwab has confirmed we can tell them how much to withhold and they will do that exactly.
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