How to manage RMD’s

[Sanstar]

For those who don’t need RMD’s to cover operational and occasional capital/lumpy expenses what do you do with them?

I’m pondering converting them to Roth, less tax, so if we need them later or leave them to kids they will be tax free. Is this reasonable? I realize this is a first world problem…but still a problem.

 

[COcheesehead]

You can’t convert an RMD to a Roth.

 

[Car-Guy]

Might check this out.
https://www.investopedia.com/ask/answers/08/ira-rmd-reinvest.asp

 

[nvestysly]

We plan to utilize Qualified Charitable Contributions (QCD) for most or all of our RMD if needed.

 

[COcheesehead]

Might check this out.
https://www.investopedia.com/ask/answers/08/ira-rmd-reinvest.asp

The OP needs earned income, RMD is not earned and can only then invest $7500 into the Roth.

 

[frayne]

Reinvest in a taxable account.

 

[Car-Guy]

+1

 

[Sanstar]

Car-guy,
Thank you for the link. Very helpful.

 

[Time2]

Car-guy,
Thank you for the link. Very helpful.

From that link, "The Internal Revenue Service (IRS) requires that you have enough earned income to cover your Roth IRA contribution for the year—but the actual source of your contribution need not be directly from a paycheck."

 

[DallasGuy]

Question about an annuity and RMD's. I'm 67 and I'll have to start taking RMD's in about 5 years. If I buy a 10 year annuity in the next few months, in general, are there government laws/provisions with annuities to allow RMD's without taking a penalty? Or is that dependent on the actual annuity provisions/rules?

I'm trying to decide whether I want to roll over an annuity that is maturing soon over to a new annuity.

 

[harllee]

We plan to utilize Qualified Charitable Contributions (QCD) for most or all of our RMD if needed.

We do this every year, make gifts to charities from our IRAs and then we have very little RMDs to take.

 

[pacergal]

Reinvest in a taxable account.

Agree

 

[braumeister]

Question about an annuity and RMD's. I'm 67 and I'll have to start taking RMD's in about 5 years. If I buy a 10 year annuity in the next few months, in general, are there government laws/provisions with annuities to allow RMD's without taking a penalty? Or is that dependent on the actual annuity provisions/rules?

I'm trying to decide whether I want to roll over an annuity that is maturing soon over to a new annuity.

It's complicated. This page may get you started.

Annuity Inside an IRA: Know the Rules

 

[Badger]

In the past it has been going into MM funds. This year we have been reinvesting our RMDs into CDs. Not sure for next year.

Cheers!

 

[yakers]

QCD or just reinvest (after paying taxes) in a taxable account. Or BTD

 

[friar1610]

We do this every year, make gifts to charities from our IRAs and then we have very little RMDs to take.

Another advantage of QCDs - amounts donated via QCD do not show up in your MAGI. If you are getting close to an IRMAA threshold, using QCDs is a good way to give yourself some breathing room.

 

[Midpack]

QCD or just reinvest (after paying taxes) in a taxable account. Or BTD

Those are the only options for anyone without earned income AFAIK.

 

[RE2Boys]

My RMDs are either used in lieu of estimated federal taxes or in lieu of charitable giving (
QCDs). Just today I took my RMD for 2023 from my 401k with 100% federal withholding.

 

[Jeffman52]

For those considering the RMD and Roths. Don't wait until RMD's hit to start converting. A Roth IRA conversion allows you, regardless of income level, to convert all or part of your existing traditional IRA funds to a Roth IRA. If you know what your cliff is for RMD's and you have time before then to do so, avoid some of it by converting prior to RMD's taking effect.