RMD? What to do with it if you don't need $

[W2R]

In a sort of half-a$$ed attempt to minimize the infamous "tax torpedo", I have been withdrawing more from the TSP than an RMD would be, each year since I retired at age 61. Basically I have been leaning on the TSP for spending money a bit more than I otherwise would have and sparing my taxable investment accounts. I hoped by doing so, to draw down the amount invested in my TSP and thus my RMD amounts. So far, so good.

Anyway, 2018 was my first year of RMD's and to meet these requirements, I continued to withdraw the same amount in equal monthly TSP payments as I have been all along. It's taxable but then it has always been taxable.

 

[2177V]

If you don't need it, give it away or reinvest per your investment policy statement. I don't know why this is complicated.

I agree. Extra money given to your young grandsons or granddaughters for their college fund can be very satisfying. Extra money to buy a yacht can also be satisfying. This is not complicated at all.

 

[youbet]

Remember that your total spend + gifts + tax still needs to be within your planned SWR.

 

[stargazer08]

Or, you can buy a horse, boat, or airplane. Any will quickly drain whatever cash you have left.

I can guarantee that if you buy a horse you will have no problem needing and/or spending future RMDs.

 

[Koolau]

Reading this thread, I get the idea that some people think that all of the assets in their IRA are theirs.

I actually DO know what you mean - and agree with you, but, my first reading of your post made me think you worked for IRS or were a long-service congress person. My bad!

 

[Winemaker]

I have managed my mom's RMD for the past 15 years, she doesn't spend what she gets in SS and DD's pension. Fidelity allows me to move securities over into her taxable account, and I allow enough dividends to stay in cash to pay the 20% withholding.

 

[gindie]

I would rather pay the taxes than not having it.

I understand, if you are creating charitable distributions, just to avoid taxes.

However, if you had expected (budgeted) a particular amount for charity anyway, then the best way to fund that amount is through a QCD, so that it is untaxed.

 

[Bart523]

I didn't read all of the posts so this may be a repeat. You can use RMD's to do Qualified Charitable Contributions. This reduces taxable income by the amount you donate. For some this is a good solution since the standard deduction now is higher than itemizing deductions.

 

[plannerkid]

Roth for grandkids

I have proposed to my parents that they match their grandkids’ contributions to Roth IRAs.

 

[2177V]

Here are the 5 biggest mistakes on RMD:

https://www.kiplinger.com/article/r...014-avoid-the-5-biggest-ira-rmd-mistakes.html

My advice: Talk to a CPA. They know the rules better than anyone because that is their profession. They usually charge between $75 to $150 an hour and you probably need only one hour of consultation. Since you don't know what to do with your RMD, you should be able afford this. CPA's have liabilities if they give you bad advice and their certification as a public accountant can even be revoked if it is serious. If you talk to anyone else, then i questioned their accountability.

 

[Souschef]

I just found out that the Collings Foundation will have a P-40 aircraft available for me to fly this year. Since is it is a 501C3 organization, most of my cost will be a QCD

 

[Squirrel]

Appreciate all of the QCD explanations in this thread.

But, I spent all of 2014 depressed over finding out that RMDs were taxed at income tax rates -- before that, I'd mistakenly thought retirement accounts invested in the stock market be taxed at capital gains rates.

 

[audreyh1]

I just found out that the Collings Foundation will have a P-40 aircraft available for me to fly this year. Since is it is a 501C3 organization, most of my cost will be a QCD

Whoa!

The no large personal material benefit received though may disqualify this. Be careful.

A QCD must be 100% deductible under normal schedule A deductibility rules. If you are receiving some specific fair market value benefit from a specific contribution then it’s not 100% deductible. https://taxmap.irs.gov/taxmap/pubs/p526-001.htm#en_us_publink1000229650