Simple question about first RMD

[mystang52]

I'm sure the answer is Yes, but I can't find anything definitive in my research:

DW's birthday is December, when she turns 72. My understanding is that since she turns 73 in December 2024, her first REQUIRED RMD withdrawal is by April 1, 2025. But we would then have to take a 2nd RMD by end of 2025.

If, instead, we start monthly withdrawals beginning January 2024, whereby the monthly amounts will accrue to whatever her RMD is, are we in full compliance, and just continue that process for each subsequent year?

 

[Souschef]

DW had the same problem, since her birthday was in December. We took the first RMD in December, than the annual RMD during each year.
Depending on your tax bracket, it may not make any difference if you double dip the first year.

 

[youbet]

If you're talking about taking 12 equal distributions which will equal the combined April and December RMD's, no you won't be in compliance. You won't have withdrawn enough to meet the April requirement by that due date.

 

[youbet]

DW had the same problem, since her birthday was in December. We took the first RMD in December, than the annual RMD during each year.
Depending on your tax bracket, it may not make any difference if you double dip the first year.

Just so there's no confusion, the December birthdays don't really have anything to do with it. My DW's birthday is in February. So, we took her first RMD in December of that year (even though we could have delayed until April of the following year). Then we took her second RMD in December of the following year. As you point out, this eliminates having two distributions added to your income in one year.

 

[MissMolly]

RMDs do not need to be withdrawn the month you turn 73, but year you turn 73. So your plan to take 12 monthly payments that will add up to the full RMD amount by December of 2024 will be just fine.

 

[youbet]

RMDs do not need to be withdrawn the month you turn 73, but year you turn 73. So your plan to take 12 monthly payments that will add up to the full RMD amount by December of 2024 will be just fine.

Not in the case he describes. I think he wants to add the RMD payment due in April with the RMD payment due in December together, divide that by 12 and make equal monthly payments. That will leave him short of the April payment due when April rolls around. But after that first year where he's choosing the "delay the first payment to April of the succeeding year strategy," I agree with you.

 

[Car-Guy]

RMDs do not need to be withdrawn the month you turn 73, but year you turn 73. So your plan to take 12 monthly payments that will add up to the full RMD amount by December of 2024 will be just fine.

If your plan allows regular withdrawals... Example, my 401k plan only allows one withdrawal a year. So I need to be sure I make sure my full RMD withdrawal when I make my single annual withdrawal.

 

[badatmath]

If your plan allows regular withdrawals... Example, my 401k plan only allows one withdrawal a year. So I need to be sure I make sure my full RMD withdrawal when I make my single annual withdrawal.

I wonder if that is common. I can get monthly, quarterly, semi-annual or annual.

 

[Car-Guy]

I wonder if that is common. I can get monthly, quarterly, semi-annual or annual.

I have no idea. I can do this in my tIRA's but not my 401k.

And BTW, a good summary from Investopedia about withdrawals:

"3. Mixing Plan Types to Meet RMDs

If you have multiple IRAs or 403(b)s, you’re allowed to combine the RMDs from the same type of account and take a single distribution from one of the accounts. You’re not permitted, though, to withdraw an RMD for an IRA from a 403(b) or vice versa. And you can’t exercise such consolidation when it comes to 401(k)s.

Regardless of account type, you can’t reach across your portfolio and take RMDs required for one type of retirement account from a different type of account."

 

[MissMolly]

Not in the case he describes. I think he wants to add the RMD payment due in April with the RMD payment due in December together, divide that by 12 and make equal monthly payments. That will leave him short of the April payment due when April rolls around. But after that first year where he's choosing the "delay the first payment to April of the succeeding year strategy," I agree with you.

That's not the way it reads to me all. He even emphasized taking 12 monthly installments so he is finished with his RMD in December 2024. A lot of people are under the misconception that RMDs start the month you turn 73 when it has nothing to do with the month. It's the year you turn 73.

 

[mystang52]

That's not the way it reads to me all. He even emphasized taking 12 monthly installments so he is finished with his RMD in December 2024. A lot of people are under the misconception that RMDs start the month you turn 73 when it has nothing to do with the month. It's the year you turn 73.

OP here. MissMolly is correct in what I want to do. Maybe a better restatement of my question: I want to meet the legal requirement for calendar year 2024. DW turns 73 December 2024. I do not want a double RMD by deferring that first withdrawal until April 2025. For numerous reasons, we'd like to do monthly withdrawals. So, if we start January 2024, accumulating the total required amount by year-end 2024, will we have met the legal requirement? Or, do the withdrawals prior to age 73 not count towards the yearly RMD?

 

[MissMolly]

OP here. MissMolly is correct in what I want to do. Maybe a better restatement of my question: I want to meet the legal requirement for calendar year 2024. DW turns 73 December 2024. I do not want a double RMD by deferring that first withdrawal until April 2025. For numerous reasons, we'd like to do monthly withdrawals. So, if we start January 2024, accumulating the total required amount by year-end 2024, will we have met the legal requirement? Or, do the withdrawals prior to age 73 not count towards the yearly RMD?

Your plan is fine. As I said it’s the year you turn 73 that matters not the month. You could take the full RMD in January 2024 and still be fine.

 

[SecondCor521]

OP here. MissMolly is correct in what I want to do. Maybe a better restatement of my question: I want to meet the legal requirement for calendar year 2024. DW turns 73 December 2024. I do not want a double RMD by deferring that first withdrawal until April 2025. For numerous reasons, we'd like to do monthly withdrawals. So, if we start January 2024, accumulating the total required amount by year-end 2024, will we have met the legal requirement? Or, do the withdrawals prior to age 73 not count towards the yearly RMD?

MissMolly and you are both correct.

Withdrawals in the year she turns 73 count, even if they occur before she actually turns 73. So monthly withdrawals starting January 2024 where the total adds up to her age 73 RMD are totally fine.

Your IRA custodian probably even has an RMD service where they'll do the monthly sell/withdraw transactions and federal tax withholding for you. Vanguard does at least. Fidelity and Schwab almost certainly do as well.

 

[youbet]

OP here. MissMolly is correct in what I want to do. Maybe a better restatement of my question: I want to meet the legal requirement for calendar year 2024. DW turns 73 December 2024. I do not want a double RMD by deferring that first withdrawal until April 2025. For numerous reasons, we'd like to do monthly withdrawals. So, if we start January 2024, accumulating the total required amount by year-end 2024, will we have met the legal requirement? Or, do the withdrawals prior to age 73 not count towards the yearly RMD?

Thanks for rewording your intentions! I get it now. Yes, as MissMolly stated, that's fine.