|
|
01-08-2017, 05:01 PM
|
#1
|
Dryer sheet aficionado
Join Date: Jul 2013
Location: Spicewood
Posts: 48
|
RMD nuts and bolts
Turning 70 next year (2018), so RMD is near and I want to see if I have all the details. tIRA value will be based on assets as of December 31st of this year. And the calculated amount must be withdrawn by April 1st of 2019 ( I guess in order to be reported on 2018 tax return). Please correct me if this is not right.
I was hoping the 1st year would be an adjusted amount based on the number of days over age 70-1/2 but that doesn't seem to be the case.
Anything I'm missing?
|
|
|
|
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
01-08-2017, 05:07 PM
|
#2
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2007
Posts: 14,328
|
I believe that if you wait until after the first of the year to take the first payment, you end up having to take two payments in the same tax year.
|
|
|
01-08-2017, 05:27 PM
|
#3
|
Thinks s/he gets paid by the post
Join Date: Jun 2007
Posts: 2,657
|
Correct. If you delay the 2018 RMD to April of 2019, you will still have to take the 2019 payment in 2019. Only the first year can be delayed to April of the following year.
Also turning 70 in 2018 isn't the trigger, it's turning 70.5 that requires RMD. So depending on where in 2018 your birthday falls will determine whether you have an RMD for 2018 or not.
|
|
|
01-08-2017, 06:33 PM
|
#4
|
Thinks s/he gets paid by the post
Join Date: Feb 2007
Posts: 2,526
|
Quote:
Originally Posted by growing_older
Correct. If you delay the 2018 RMD to April of 2019, you will still have to take the 2019 payment in 2019. Only the first year can be delayed to April of the following year.
Also turning 70 in 2018 isn't the trigger, it's turning 70.5 that requires RMD. So depending on where in 2018 your birthday falls will determine whether you have an RMD for 2018 or not.
|
I always get confused about this. My wife's 70th birthday is on November 2018. So when ( in what year) does she have to withdraw the RMD so that 2 withdrawals in one year are not incurred? And what date IRA balance is that calculated on?
|
|
|
01-08-2017, 06:52 PM
|
#5
|
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: 50,022
|
Quote:
Originally Posted by ejman
My wife's 70th birthday is on November 2018. So when ( in what year) does she have to withdraw the RMD so that 2 withdrawals in one year are not incurred?
|
2019.
She could wait until April 1, 2020 to take her first RMD but will also be required to take her second RMD by December 31, 2020 regardless of when she takes her first RMD.
Quote:
Originally Posted by ejman
And what date IRA balance is that calculated on?
|
December 31, 2018
__________________
Numbers is hard
|
|
|
01-08-2017, 07:55 PM
|
#6
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2006
Location: Boise
Posts: 7,882
|
^
<pedantic>
...December 31, 2020...
</pedantic>
__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
|
|
|
01-08-2017, 08:05 PM
|
#7
|
Dryer sheet aficionado
Join Date: Jul 2013
Location: Spicewood
Posts: 48
|
Quote:
Originally Posted by travelover
I believe that if you wait until after the first of the year to take the first payment, you end up having to take two payments in the same tax year.
|
Wouldn't the second withdrawal need to be based on the account balance on Dec. 31st of the second year (i.e.) 2018 and therefore still be acceptable prior to April 1st of 2020 and reported on the 2019 tax return?
|
|
|
01-08-2017, 09:07 PM
|
#8
|
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: 50,022
|
Quote:
Originally Posted by larrytbm
Wouldn't the second withdrawal need to be based on the account balance on Dec. 31st of the second year (i.e.) 2018 and therefore still be acceptable prior to April 1st of 2020 and reported on the 2019 tax return?
|
Only the first RMD can be delayed unti April 1. Thereafter (from the IRS website):
Quote:
For each subsequent year after your required beginning date, you must withdraw your RMD by December 31.
|
__________________
Numbers is hard
|
|
|
01-08-2017, 09:39 PM
|
#9
|
Full time employment: Posting here.
Join Date: Oct 2007
Posts: 798
|
Another RMD question. If I understand the process correctly, you take the balance of all your IRAs as of December 31 and use one of the calculators available to determine your RMD. Then you can withdraw that amount from one account or a combination of accounts. Roth IRAs are not included.
What about traditional, non-deductible IRAs? I think they are included with all your other IRAs, but I can't find anything that definitely states that. I have been filing form 8806 for many years, so I am good in that regard.
Any help is appreciated.
__________________
Mission accomplished - not necessarily ER, but certainly R.
|
|
|
01-08-2017, 10:02 PM
|
#10
|
Thinks s/he gets paid by the post
Join Date: Jun 2007
Posts: 2,657
|
Quote:
traditional, non-deductible IRAs
|
They are all included together when figuring the RMD (excluding Roth). Then the percentage of basis in traditional non-deductible IRA compared to total IRA value (excluding Roth) is how much of the RMD is taxable.
|
|
|
01-08-2017, 10:08 PM
|
#11
|
Full time employment: Posting here.
Join Date: Oct 2007
Posts: 798
|
Quote:
Originally Posted by growing_older
They are all included together when figuring the RMD (excluding Roth). Then the percentage of basis in traditional non-deductible IRA compared to total IRA value (excluding Roth) is how much of the RMD is taxable.
|
I understand that the tax on the non-deductible portion is determined on the 8806. That's pretty straightforward and I've been doing that for several years.
For the RMD itself, without worrying about taxes, it looks like my assumption that you include the value of all IRAs in the calculation (except Roth).
__________________
Mission accomplished - not necessarily ER, but certainly R.
|
|
|
01-08-2017, 10:40 PM
|
#12
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 17,099
|
Quote:
Originally Posted by beowulf
......
For the RMD itself, without worrying about taxes, it looks like my assumption that you include the value of all IRAs in the calculation (except Roth).
|
Yes.
|
|
|
01-09-2017, 05:26 AM
|
#13
|
Thinks s/he gets paid by the post
Join Date: Nov 2008
Posts: 3,410
|
My wife turns 70 in a few days (Jan 2017). So she will be taking her RMD this year and the amount will be based on Dec 31, 2016 and then for each future year based on the previous year. She wants to make the withdrawal at the beginning of each year to get it out of the way and have the funds to work with throughout that year. If calculations were based on Dec 31, 2017 the she wouldn't know the correct amount until the end of the year. This would be a pain in the neck. Don't want to incur any penalties. All her IRAs are invested with Vanguard and they should be making the calculations with the correct numbers and notifying her but I would feel more comfortable with a few verifications.
I won't turn 70.5 until 2019 so mine should be based on Dec 31, 2018.
I think I have this right. I'm sure not looking forward to paying a lot more taxes by then.
Cheers!
|
|
|
01-09-2017, 05:39 AM
|
#14
|
Moderator
Join Date: Feb 2010
Location: Flyover country
Posts: 25,362
|
One more little wrinkle I usually bring up because it's not widely known:
To avoid making estimated tax payments quarterly, you can have your entire expected tax bill withheld from your RMD. The IRS treats anything withheld as if it had been paid evenly throughout the year. For those who don't need the money to live on, it could be advantageous to take that RMD and withholding in December, so the money keeps earning for you throughout the year.
|
|
|
01-09-2017, 07:46 AM
|
#15
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,897
|
Quote:
Originally Posted by braumeister
One more little wrinkle I usually bring up because it's not widely known:
To avoid making estimated tax payments quarterly, you can have your entire expected tax bill withheld from your RMD. The IRS treats anything withheld as if it had been paid evenly throughout the year. For those who don't need the money to live on, it could be advantageous to take that RMD and withholding in December, so the money keeps earning for you throughout the year.
|
My MIL's tax accountant (they've used him since when they had their own business, and just continued afterwards) has her take her RMD in Q4. I always kind of wondered about that, so now I'm sure that is the reason - good point! I'll plan to do that when the time comes.
-ERD50
|
|
|
01-09-2017, 07:55 AM
|
#16
|
gone traveling
Join Date: Sep 2003
Location: DFW
Posts: 7,586
|
My birthday in in the later part of June, so do I have to take a RMD that year, and what happens if you have been taking monthly distributions during that same year; do you just net the difference between the RMD and what you took out already and owe that amount by the end of the year?
|
|
|
01-09-2017, 07:59 AM
|
#17
|
Thinks s/he gets paid by the post
Join Date: Jun 2010
Posts: 2,140
|
If your birthday is in June, then you turn 70 1/2 in December, so yes, you would be required to take an RMD that year. Any money withdrawn from the IRA or 401K during the year in which you turn 70 1/2 counts towards your RMD.
__________________
And whatever your labors and aspirations in the noisy confusion of life, keep peace in your soul. With all its sham, drudgery, and broken dreams, it is still a beautiful world. Be cheerful. Strive to be happy.- Desiderata by Max Ehrmann
|
|
|
01-09-2017, 08:31 AM
|
#18
|
gone traveling
Join Date: Sep 2003
Location: DFW
Posts: 7,586
|
Quote:
Originally Posted by MissMolly
If your birthday is in June, then you turn 70 1/2 in December, so yes, you would be required to take an RMD that year. Any money withdrawn from the IRA or 401K during the year in which you turn 70 1/2 counts towards your RMD.
|
Thanks, thats what I thought.
|
|
|
01-09-2017, 08:49 AM
|
#19
|
Thinks s/he gets paid by the post
Join Date: Feb 2007
Posts: 2,526
|
Quote:
Originally Posted by braumeister
One more little wrinkle I usually bring up because it's not widely known:
To avoid making estimated tax payments quarterly, you can have your entire expected tax bill withheld from your RMD. The IRS treats anything withheld as if it had been paid evenly throughout the year. For those who don't need the money to live on, it could be advantageous to take that RMD and withholding in December, so the money keeps earning for you throughout the year.
|
But, assuming one is invested in stock/bond funds that drop a lot in value during the year (such as 1987, 1990, 2002, 2008 etc), wouldn't this result in selling more shares to cover the RMD liability than if one had sold on Jan 1?
|
|
|
01-09-2017, 09:04 AM
|
#20
|
Moderator
Join Date: Feb 2010
Location: Flyover country
Posts: 25,362
|
Quote:
Originally Posted by ejman
But, assuming one is invested in stock/bond funds that drop a lot in value during the year (such as 1987, 1990, 2002, 2008 etc), wouldn't this result in selling more shares to cover the RMD liability than if one had sold on Jan 1?
|
That's why I said it could be advantageous. YMMV.
|
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|