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Old 01-14-2022, 01:42 PM   #21
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I just wish the IRS would make it simple. All their charts are so confusing.

For my first RMD at age 72, what percentage of my 12/31/2021 IRA Rollover balance to I need to withdraw in 2022?

Now I need to project my income for 2022 in order to setup future tax withdrawal amounts. Obviously, I'll be kicked up a notch or two in tax liabilities.
Assuming you're turning 72 in 2022, and you're either single or married with a spouse who is within 10 years of your age (and maybe a few other caveats), you would take your 12/31/2021 year end balance and divide that by 27.4 to arrive at your RMD amount. This is approximately equivalent to a withdrawal of 3.65%.

Generally speaking your IRA custodian should be able and willing to do the calculation for you. They might even have an RMD service where they make the RMD for you automatically. If you're unsure of the calculation, doublechecking with them would be a good idea to minimize error.
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Old 01-14-2022, 01:50 PM   #22
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Originally Posted by Bamaman View Post
I just wish the IRS would make it simple. All their charts are so confusing.

For my first RMD at age 72, what percentage of my 12/31/2021 IRA Rollover balance to I need to withdraw in 2022?

Now I need to project my income for 2022 in order to setup future tax withdrawal amounts. Obviously, I'll be kicked up a notch or two in tax liabilities.
If you can't find the table here on our site, you can google it. It's actually simpler than it sounds. When in doubt, take a little extra. Penalties for not taking enough are draconian (50% of what you should have taken but didn't.) I'm surprised your tIRA custodian doesn't calculate the amount for you. Maybe that's only for 401(k) custodians. Mine gave me the required amount to the penny. YMMV
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Old 01-14-2022, 02:00 PM   #23
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Regarding the draconian penalty, yes, it is 50% of the amount that should have been taken but wasn't. See Form 5329, I think it's "Excess Deferral" or something similar.

However, it is possible to request a waiver of the penalty. It is my understanding that the IRS is generally lenient, especially for the first RMD. If one requests a waiver, one should also take a corrective distribution of the amount one should have taken but didn't. This corrective distribution should be in addition to the RMD for the year in which the corrective distribution was taken.

Another option to remember is that for your first year, you have until April 1st of the year following your age-72 year to complete your first RMD. It isn't much extra time, but if you take what you think your RMD should be this year and find out you're a bit low, you can take the additional amount by April 1st (2023 in this case) and not even have to do the penalty waiver thing.

The April 1st thing is only for your first RMD, not for any subsequent years.
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Old 01-14-2022, 02:57 PM   #24
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I have a spreadsheet that does the calculations. I have downloaded the IRS table to use in the RMD calculations.
For a sanity check, both my brokers also calculate the RMD. Fortunately, we are spot on with their numbers.
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Old 01-14-2022, 08:37 PM   #25
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I have a problem with this year's RMD amount. Schwab emailed me and said here is your RMD calc;

$713,111.03 (TIRA final balance at 12/31)

RMD calculated by Schwab = $33,445.68

Now my age at the end of this year will be 79
I am not making my spouse the beneficiary of the IRA

My IRS chart factor is 21.1 (Care act table per IRS)

My calculations show $33,796.73

OK, who is right?

No matter which tables I use, I can't duplicate their number.
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Old 01-14-2022, 09:44 PM   #26
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Originally Posted by aja8888 View Post
I have a problem with this year's RMD amount. Schwab emailed me and said here is your RMD calc;

$713,111.03 (TIRA final balance at 12/31)

RMD calculated by Schwab = $33,445.68

Now my age at the end of this year will be 79
I am not making my spouse the beneficiary of the IRA

My IRS chart factor is 21.1 (Care act table per IRS)

My calculations show $33,796.73

OK, who is right?

No matter which tables I use, I can't duplicate their number.
My new divisor table agrees with you that for age 79 the divisor should be 21.1 assuming you don't have to use Table II.

My math agrees with you that if your 12/31 IRA balance is as you gave it, then the math results in the $33,796.73 that you got.

But I also think Schwab is pretty competent and that their computers can do math.

I did the reverse math and divided your balance by their RMD and get a number a bit over 21.3 but not exactly 21.3.

Based on the above:

I don't think Schwab is using the old table. They're more competent than that, and if they did use the old table the divisor would be 19.5 and their amount would be higher.

I suspect something unusual is going on:

Perhaps your 12/31 balance is not what you think it was - maybe there were some outstanding dividends or interest that were paid into your account that weren't reflected in your 12/31 number you gave.

Perhaps you have an outstanding IRA rollover. That apparently can affect the balance and affect RMDs.

Of course, you could call Schwab and ask how they got that number.

ETA: I can't even find a 21.3 number in Table II unless you're actually turning 80 and your wife is turning 66 this year. Even then, the 21.3 would mean an RMD of $33,479.39. So I still think your 12/31 number is off somehow.
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Old 01-15-2022, 03:06 AM   #27
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Quote:
Originally Posted by aja8888 View Post
I have a problem with this year's RMD amount. Schwab emailed me and said here is your RMD calc;

$713,111.03 (TIRA final balance at 12/31)

RMD calculated by Schwab = $33,445.68

Now my age at the end of this year will be 79
I am not making my spouse the beneficiary of the IRA

My IRS chart factor is 21.1 (Care act table per IRS)

My calculations show $33,796.73

OK, who is right?

No matter which tables I use, I can't duplicate their number.
Much as I trust my 401(k) custodian, I took extra - just to be certain! YMMV
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Old 01-15-2022, 07:06 AM   #28
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Much as I trust my 401(k) custodian, I took extra - just to be certain! YMMV
+1

Not pertaining to aja8888's issue, but a lot of people seem to get fixated on the to-the-penny RMD amount. Rounding up to the next hundred or thousand won't make a material difference in taxes for most 5-digit RMDs. Here I would draw $34,000 and be done with it.

But for aja8888 it is disturbing that Schwab shows an unexplained number that appears too low, potentially exposing customers to penalties. If it is wrong, which FWIW seems unlikely, it is a real problem.

Did you look at your RMD online? At Vanguard the RMD page lists the divisor used and the RMD amount, does Schwab? SecondCor's suggestion about the year-end balance makes sense, except you said the email listed the balance and RMD amount and they don't add up.
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Old 01-15-2022, 07:43 AM   #29
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SecondCor's suggestion about the year-end balance makes sense, except you said the email listed the balance and RMD amount and they don't add up.
It wasn't clear to me from their post that Schwab's RMD email contained the $713K number. I think it is possible - in fact I suspect this is true - that the $713K number came from their own records and not Schwab's RMD email.

The reason I suspect this is that I'm highly confident that Schwab would use a divisor that only has one digit after the decimal point. I'm also highly confident that the number they provided as Schwab's calculated RMD is probably right.

If those both are true, then taking the $713K/Schwab RMD number, you get something like 21.32. Which can't be right - it should be something even like 21.30. Ergo, I conclude that their account balance number must be off somehow.

Several ways for that number to be off: they didn't write it down correctly, they're looking for the number in the wrong place (November statement balance?), they had other income coming in that wasn't reflected in the $713K number, they have a rollover in progress, or something else.
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Old 01-15-2022, 08:12 AM   #30
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My (snake-bit) friend has had an inherited IRA which I help him manage since late 2012, when his remaining parent passed away. The divisor in his RMD calculation has been dropping by one each year, as expected, usually raising his RMD unless its year-end balance dropped by a lot like what happened in late 2018.

But for 2022, with the change in the tables, the divisor went up by 2 (years), lowering his 2022 RMD by about $300. This will be useful in the next few years because it will allow the cash-generating portion of the IRA to continue generating enough cash to pay the RMD without having to sell anything. I set up this auto-pilot feature to make managing his IRA a little easier for me (and he is fine with that).
I would have thought an inherited IRA from 2012 would have retained the divisor pattern (minus 1.0 for each subsequent year) regardless of what the RMD tables state.
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Old 01-15-2022, 08:19 AM   #31
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I would have thought an inherited IRA from 2012 would have retained the divisor pattern (minus 1.0 for each subsequent year) regardless of what the RMD tables state.
Nope. The new tables are in effect for inherited IRAs also. But it's a little odd how it works. I'm not sure if scrabbler1 or the IRA custodian for his snake-bit friend did things properly, either.

The proper way to handle inherited IRAs with the new tables is to figure out how old one was in for the first RMD from the inherited IRA (so how old Mr. SnakeBit was in 2012 or 2013 - whichever was the year after the original owner died), look up the divisor for that age in the new RMD tables, and then subtract one for each intervening year between then and now. And then subtract one from that number for each year going forward, of course.

Of course, as someone else pointed out, one could do as you describe and continue subtracting one from the divisor from the old RMD tables and be OK, since the new divisors in the new tables result in a lower RMD. You'd just be taking out a bit more than absolutely necessary, which in most cases probably isn't a big deal.
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Old 01-15-2022, 08:25 AM   #32
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Good to know. I have a small inherited IRA, also from 2012, and I just checked online with Vanguard, and sure enough, the divisor has changed course slightly. Based on how you described it, it appears Vanguard did it correctly.
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Old 01-15-2022, 09:11 AM   #33
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My new divisor table agrees with you that for age 79 the divisor should be 21.1 assuming you don't have to use Table II.

My math agrees with you that if your 12/31 IRA balance is as you gave it, then the math results in the $33,796.73 that you got.

But I also think Schwab is pretty competent and that their computers can do math.

I did the reverse math and divided your balance by their RMD and get a number a bit over 21.3 but not exactly 21.3.

Based on the above:

I don't think Schwab is using the old table. They're more competent than that, and if they did use the old table the divisor would be 19.5 and their amount would be higher.

I suspect something unusual is going on:

Perhaps your 12/31 balance is not what you think it was - maybe there were some outstanding dividends or interest that were paid into your account that weren't reflected in your 12/31 number you gave.

Perhaps you have an outstanding IRA rollover. That apparently can affect the balance and affect RMDs.

Of course, you could call Schwab and ask how they got that number.

ETA: I can't even find a 21.3 number in Table II unless you're actually turning 80 and your wife is turning 66 this year. Even then, the 21.3 would mean an RMD of $33,479.39. So I still think your 12/31 number is off somehow.
I was updating a spreadsheet from a year ago in which I had entered the "new" factors. When I checked them against the released table, some years were different by .1

My theory is that I was using a preliminary version of the new tables and the final ones came in ever so slightly different than the preliminary I was using.

Perhaps this is what happened here. Perhaps Schwab has an older version of the tables in their system.
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Old 01-15-2022, 11:15 AM   #34
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It wasn't clear to me from their post that Schwab's RMD email contained the $713K number. I think it is possible - in fact I suspect this is true - that the $713K number came from their own records and not Schwab's RMD email.

The reason I suspect this is that I'm highly confident that Schwab would use a divisor that only has one digit after the decimal point. I'm also highly confident that the number they provided as Schwab's calculated RMD is probably right.

If those both are true, then taking the $713K/Schwab RMD number, you get something like 21.32. Which can't be right - it should be something even like 21.30. Ergo, I conclude that their account balance number must be off somehow.

Several ways for that number to be off: they didn't write it down correctly, they're looking for the number in the wrong place (November statement balance?), they had other income coming in that wasn't reflected in the $713K number, they have a rollover in progress, or something else.

Very strange as there are no dividends that were not posted at all (everything in the 12/31/2021 statement is current), or was there any other account or rollover pending that would affect the TIRA. I have a brokerage account with Schwab also but that is a completely separate account number and income is taxable.

I will be calling Schwab next week after the Monday holiday to sort this out.
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Old 01-15-2022, 11:19 AM   #35
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+1

Not pertaining to aja8888's issue, but a lot of people seem to get fixated on the to-the-penny RMD amount. Rounding up to the next hundred or thousand won't make a material difference in taxes for most 5-digit RMDs. Here I would draw $34,000 and be done with it.

But for aja8888 it is disturbing that Schwab shows an unexplained number that appears too low, potentially exposing customers to penalties. If it is wrong, which FWIW seems unlikely, it is a real problem.

Did you look at your RMD online? At Vanguard the RMD page lists the divisor used and the RMD amount, does Schwab? SecondCor's suggestion about the year-end balance makes sense, except you said the email listed the balance and RMD amount and they don't add up.
Yes, the Schwab account has a online separate page for taking your RMD. That's where I do the pull. And I usually pull a few hundred more than their shown amount to cover any issue. But every past year, that account applicable amount has always matched the 12/31 final balance and it does not this year. I check that statment just to be sure, bur this year it was a surprise.
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Old 01-15-2022, 11:39 AM   #36
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I didn't mind being 65 years old and getting into Medicare. I'd just run out of a RHSA account that'd paid 6 years' healthcare premiums for my wife and me.

But being 72 years old and having to get into RMD's is another issue as I really don't have anything to do with the money.

My wife says we worked too hard and did without for so many years. (Actually we didn't do without much.) She says we're going to spend it. The issue is there's really nothing now or in the near future we need--as we have 2 late model cars. So she's back to planning vacations to far away places.
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Old 01-16-2022, 01:04 AM   #37
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I just wish the IRS would make it simple. All their charts are so confusing.

For my first RMD at age 72, what percentage of my 12/31/2021 IRA Rollover balance to I need to withdraw in 2022?

Now I need to project my income for 2022 in order to setup future tax withdrawal amounts. Obviously, I'll be kicked up a notch or two in tax liabilities.
Remember there is the RMD from IRA's all counted as one.
And there is the RMD from 401K's

No kidding it's NOT simple.
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Old 01-16-2022, 08:04 AM   #38
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I didn't mind being 65 years old and getting into Medicare. I'd just run out of a RHSA account that'd paid 6 years' healthcare premiums for my wife and me.

But being 72 years old and having to get into RMD's is another issue as I really don't have anything to do with the money.

My wife says we worked too hard and did without for so many years. (Actually we didn't do without much.) She says we're going to spend it. The issue is there's really nothing now or in the near future we need--as we have 2 late model cars. So she's back to planning vacations to far away places.
More vacations are fine. But if you had done what I did the past few years, you'd barely notice the difference once you're in RMD land.

And what I did was: I Roth-converted an amount approximately equal to my projected RMD in the past few years prior to this year and age 72.
Obviously can't Roth convert an RMD, so that amount will be going to my taxable account henceforth...
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Old 01-16-2022, 01:48 PM   #39
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Remember there is the RMD from IRA's all counted as one.
And there is the RMD from 401K's

No kidding it's NOT simple.
Agreed. I've made a lot of investment mistakes in my life, but I'm still patting myself on the back for converting all my tIRAs to Roth so I only have a single RMD (from my 401(k)). The older I get the simpler I want my finances to be. YMMV
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Old 01-17-2022, 06:48 PM   #40
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Agreed. I've made a lot of investment mistakes in my life, but I'm still patting myself on the back for converting all my tIRAs to Roth so I only have a single RMD (from my 401(k)). The older I get the simpler I want my finances to be. YMMV
Qualified Charitable Distributions (QCD) are only available with IRA, not 401k nor other retirement accounts. If you do not give to charity, then no problem having only a 401k if the fees and ERs are low.
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