No RMD's in 2020

Crap I already did rmd to fund my roth. I guess there is no undoing that. Could have been worth it to wait til 2021 and get a higher subsidy.
 
Sunset said:
I don't know, but I think maybe you can undo it. It's possibly worth checking into.
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Because I’m a freaking financial genius I already invested it in the Roth. Let’s just say market timing is not my forte. It’s maybe 6k so not a huge amount but still...
 
Yarnstormer said:
Crap I already did rmd to fund my roth. I guess there is no undoing that. Could have been worth it to wait til 2021 and get a higher subsidy.
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Yarnstormer said:
Because I’m a freaking financial genius I already invested it in the Roth. Let’s just say market timing is not my forte. It’s maybe 6k so not a huge amount but still...
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Can you elaborate on this a little bit? You can't use an RMD to fund a Roth IRA. If you took the money from your IRA and put it in your Roth IRA, then it's a Roth Conversion. You can recharacterize it during this calendar year and put it back in your tIRA if you want to. I don't see why you would though, it's growing tax free in the Roth now.

Otherwise, if you are over 70 1/2 and taking RMDs, then you can only put money in your Roth IRA if you are also still working; or if you first take the RMD (which is $0 this year) and then do a conversion of additional funds.
 
The "no RMD's required in 2020" is to allow people the ability to not sell at these depressed market levels (which in itself is a market crutch... less selling!).


If you sold in January or before the market dropped, you weren't harmed... so other than maybe missing an opportunity had you waited longer, I don't understand the need to un-do prior RMDs.
 
Our 2018 and 2019 income was high enough to disqualify us for the 1,200 buck dole being passed out. But, without having to take RMD's in 2020, we might just make it under the wire and get our share when doing our 2020 taxes in 2021. That would be nice!
 
>> You can re-characterize it (from ROTH) during this calendar year and put it back in your IRA if you want to.

AFAIK, this stopped in 2018. Too much abuse (maybe because of me <g>)
 
Special situation this year, you can bring it back to the IRA, including taxes (probably to be reclaimed when filing in 2021 for tax year 2020)... so you have to scrape up the tax paid from current cash on hand.
See: Kiplinger - "Congress to Help Retirees Cope With Market Downturn"
 
Sue J said:
Per https://www.kiplinger.com/article/r...s-stimulus-you-can-wait-to-take-your-rmd.html

Scroll about halfway down -
Distributions from inherited IRAs are not included in the waiver and will still need to be taken in 2020.
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I see the statement in the article, but I'm not sure I trust a statement like that from a personal finance website without some logic, reasoning, or citation. Especially when it appears to go against the plain language of the bill. I'll be interested to see if others come to the same or different conclusion.
 
Originally Posted by Another Reader View Post
Does that apply to inherited IRA's? Because I'm going to do this if it does.

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SecondCor521 said:
It would seem to apply. I don't know of any IRS rule that it wouldn't apply. However, your IRA custodian may not be set up to accept a rollover into an inherited IRA, as that is something that normally would not happen.

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https://www.bogleheads.org/forum/viewtopic.php?p=5139785#p5139785
Re: IRS Suspends RMD
Post by Alan S. » Fri Mar 27, 2020 8:31 pm

"Inherited IRA RMDs are waived by the CARES Act.

However, unlike owned IRAs if a distribution (RMD or not) has been taken from an inherited IRA by a non spouse beneficiary, there is no way to get that money back into the inherited IRA."
********************************************************

Note the general advice has been to always move inherited IRAs by direct transfer. This is because rollovers are not allowed and result in taxation of the withdrawn amount.
 
Spock said:
The "no RMD's required in 2020" is to allow people the ability to not sell at these depressed market levels (which in itself is a market crutch... less selling!).


If you sold in January or before the market dropped, you weren't harmed... so other than maybe missing an opportunity had you waited longer, I don't understand the need to un-do prior RMDs.
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to avoid having to pay taxes on the distribution this year.
 
cathy63 said:
Can you elaborate on this a little bit? You can't use an RMD to fund a Roth IRA. If you took the money from your IRA and put it in your Roth IRA, then it's a Roth Conversion. You can recharacterize it during this calendar year and put it back in your tIRA if you want to. I don't see why you would though, it's growing tax free in the Roth now.

Otherwise, if you are over 70 1/2 and taking RMDs, then you can only put money in your Roth IRA if you are also still working; or if you first take the RMD (which is $0 this year) and then do a conversion of additional funds.
Click to expand...

yes. the RMD is from an inherited IRA. When I can, I use it to fully fund my Roth IRA instead of blowing it. I was shifting stuff around in January anyway so for some reason it seemed like a good idea to go ahead and do that. I'm partially retired I guess still working part time self employed. If I did not have the RMD tho, I don't think I could scrape up the roth money so there's that. I am 57.
 
SecondCor521 said:
I see the statement in the article, but I'm not sure I trust a statement like that from a personal finance website without some logic, reasoning, or citation. Especially when it appears to go against the plain language of the bill. I'll be interested to see if others come to the same or different conclusion.
Click to expand...

Please post if you find a more definitive citation. I always thought of Kiplinger's as reliable because they have that nice printed magazine. ;)

Hard to know who to believe anymore.

I haven't taken the inherited IRA RMD yet. I don't need the cash and would rather not take it if that option is available.
 
Sue J said:
Please post if you find a more definitive citation. I always thought of Kiplinger's as reliable because they have that nice printed magazine. ;)

Hard to know who to believe anymore.

I haven't taken the inherited IRA RMD yet. I don't need the cash and would rather not take it if that option is available.
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Forbes apparently disagrees with Kiplinger: Article Here So I guess it comes down to which nice printed magazine you like better. :D

Children, grandchildren and others who have inherited IRAs (pretax IRAs and Roth IRAs) must take annual withdrawals regardless of their own age. They too get an RMD holiday for 2020. (Another SECURE ACT wrinkle: Inherited accounts where the original account owner died on Jan. 1, 2020 or later must be depleted in a 10-year window, except for spouses, and select other heirs). Watch out: Taxpayers who miss an RMD can be hit with a 50% penalty tax, on top of regular tax, on what they should have taken.
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The CARES act says "The requirements of this paragraph [referring to Section 401(a)(9), which defines required distributions for retirement plans including inherited IRAs] shall not apply for calendar year 2020 to ... an individual retirement plan."

The only thing I see in there that's specific to inherited accounts is: "(II) if clause (ii) of subparagraph (B) applies, the 5-year period described in such clause shall be determined without regard to calendar year 2020.’’ So to me, that would mean that if you inherit an IRA in 2020 that would normally be subject to the 5-year distribution rule, you would get an extra year to empty it. If you inherit an account this year that is subject to the 10-year rule, you don't get any relief.
 
Yarnstormer said:
yes. the RMD is from an inherited IRA. When I can, I use it to fully fund my Roth IRA instead of blowing it. I was shifting stuff around in January anyway so for some reason it seemed like a good idea to go ahead and do that. I'm partially retired I guess still working part time self employed. If I did not have the RMD tho, I don't think I could scrape up the roth money so there's that. I am 57.
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Oh, I see! So it's a regular contribution to your Roth IRA based on your earned income. I think you are out of luck for this year since it's probably been more than 60 days since you took the RMD and as you said, you might not be able to scrape up the money to put it back.
 
Sue J said:
Please post if you find a more definitive citation. I always thought of Kiplinger's as reliable because they have that nice printed magazine. ;)

Hard to know who to believe anymore.

I haven't taken the inherited IRA RMD yet. I don't need the cash and would rather not take it if that option is available.
Click to expand...

In addition to Forbes, there's also the following Kitces article:

https://www.kitces.com/blog/analyzi...business-relief-for-the-coronavirus-pandemic/

Quote:

"Section 2203 of the CARES Act amends IRC Section 401(a)(9) to suspend Required Minimum Distributions (RMDs) during 2020. The relief provided by this provision is broad and applies to Traditional IRAs, SEP IRAs, and SIMPLE IRAs, as well as 401(k), 403(b), and Governmental 457(b) plans.
Furthermore, the relief applies to both retirement account owners, themselves, as well as to beneficiaries taking stretch distributions."

I tend to trust Kitces more than Kiplinger's, but YMMV.
 
cathy63 said:
The only thing I see in there that's specific to inherited accounts is: "(II) if clause (ii) of subparagraph (B) applies, the 5-year period described in such clause shall be determined without regard to calendar year 2020.’’ So to me, that would mean that if you inherit an IRA in 2020 that would normally be subject to the 5-year distribution rule, you would get an extra year to empty it. If you inherit an account this year that is subject to the 10-year rule, you don't get any relief.
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That part about the 10-year rule is unfortunate. It doesn't apply to me, thankfully, so I don't have to worry about it.

But I wonder if an argument could be made that someone subject to the 10-year rule could skip a year based on the fact that the 10-year rule was created by taking the 5-year rule and changing "5" to "10". Probably not.

(The above assumes that the 10 year period we're talking about here is the SECURE Act new 10 year period for IRAs inherited after 12/31/19. If not, please disregard.)
 
I am thinking this would be a good time to take the last bit of cash in Mr. A's tiny 401K and put it into VWELX.
 
I was expecting this action on RMDs. I think that they did this (suspend) once before. Does anyone else recall if I am correct? As I have always said, "it's not a loss/gain unless you take the cash out."
 
Moemg said:
I already took 2/3 of mine .I wonder if I can just skip the last third ?
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Yes, if you are referencing an RMD from your IRA, not an inherited one.

I've taken about 1/3 of mine and will take more, but not 100% of what was required before the govt said "never mind."
 
Of course the issue of RMDs also includes the question of what future tax rates will be,
many say that tax rates have no where to go but up, so taking a withdrawal might make sense as for example if you look at the 2017 tax rates and figure the difference with current tax rates, you might if the market climbs back get some of the tax back in market gains. (or not). best bet now might be to wait till oct and decide what to do then.
 
Well, I took about 22% of my 2020 RMDs (all from inherited IRAs) just because I had a need for the cash. I usually take the whole thing near the end of the year, but this year it was easier to take part of the RMD earlier. I was going to wait until 4Q to take the rest anyway, especially after the drop, but now I'll definitely want to know decisively if I need to take it or not first.
 
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