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Old 01-29-2021, 06:19 PM   #21
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One of my relatives takes 1/12 per month and seems to find it annoying in some fashion (IDK why) but I went to search on a tax question for him and ran across an article "most take it in Dec" which is what prompted the thought. I am all for least annoying possible.
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Old 01-29-2021, 06:36 PM   #22
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Thanks OldShooter.
I guess it will all work out I just get a little intimated by it and hate to think about that time in my life. Lol
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Old 01-29-2021, 06:43 PM   #23
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Thanks OldShooter.
I guess it will all work out I just get a little intimated by it and hate to think about that time in my life. Lol
Trust me, the worst thing about that time of life is NOT RMDs, it's being that old! Your custodian will tell you exactly how much you have to take to keep the Feds happy (with you.) I personally do a hefty (usually 20% withholding) on my RMD. That typically covers most of my un-withheld income for tax purposes. You'll figure it out easily and will give thanks that you have a 1st world problem (taking those darned RMDs)! YMMV
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Old 01-29-2021, 07:01 PM   #24
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I have rmds at fidelity and have always made the changes online. Don't remember ever calling them with regard to rmds.
All inherited IRAs require ANY changes be made by a Fido rep. Traditional RMDs 100K+ require Fido intervention for ALL changes. We split that one 50/50 and can now make changes.
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Old 01-30-2021, 01:48 AM   #25
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I actually considered doing quarterly RMDs but Iím so far away from reaching the point of being required to take RMDs I have time to change my mind.
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Old 01-30-2021, 02:18 AM   #26
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Do some here have them take the taxes out before they send the check?? How can it be trued up with markets changing till the first of each year?
Vanguard's service allows you to automatically withhold X% in federal taxes from each RMD. That's what my Dad does.

An RMD for any given year is calculated based on the 12/31 value of the prior year divided by a divisor which is essentially the RMD owner's life expectancy.

So my Dad's RMD for 2021 is based on his 12/31/2020 IRA value divided by his divisor, and then divided by 12 for monthly.

What the markets do this year don't affect the RMD amount in any way (other than affecting the 12/31/2021 value, which will be used for 2022 RMDs).
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Old 01-30-2021, 06:47 AM   #27
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This is another of those win/win discussions. OP never mentioned if they are living off the RMD or just reinvesting in a taxable account. I think that makes a small difference. IF it is for monthly spending purposes, I am an "each month" withdrawal kind of guy. IF your planning on doing Roth conversions past RMD time, remember that RMD's must be withdrawn first. Then the Roth conversion can happen.

For those who promote an "end of year" withdrawal over a "first of year", doesn't the benefit of added earnings only affect the first year's RMD? I mean there is virtually no difference in an ongoing plan whether you withdraw on 12/31 or the next day on 1/1. Several years into RMD, I suspect it becomes inconsequential. I admit I haven't done the math. And again, the numbers may change depending on whether one is depositing it into a taxable account or spending it.
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Old 01-30-2021, 07:00 AM   #28
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I really dislike even thinking about it. Not that I have to pay the taxes, just that it all works out so I pay all need too.

Do some here have them take the taxes out before they send the check?? How can it be trued up with markets changing till the first of each year?
I think Street’s concern about market changes if you wait until late is that you could be selling assets that have dropped in value since the start of the year when your RMD amount was determined (prior Dec 31 value).

This can be handled in various ways. You can set aside the required funds inside the IRA early in each year and use those to fulfill RMDs during the year. You could draw from fixed income only and rebalance at the end of each year. You could decide it doesn’t matter and sell proportionally from each fund for each RMD during the year - most brokerages allow this particular scenario as it’s the easiest.

A key point is that the amount that has to be withdrawn each year is fixed by your age (at year end) and the prior Dec 31 value of your IRA. So you just have to decide which IRA funds it is going to be withdrawn from during the year.
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Old 01-30-2021, 07:48 AM   #29
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audreyh1, that market change works both ways. Yes, there is risk by waiting until the end of year. Since market typically rises over the long term, I expect it would more often work in your favor. On the other hand, there is no arguing at minimum, setting that amount aside at the beginning of the year is the "safer" route for those who are risk averse . Then it could be paid whatever time of year you chose with virtually no affect one way or the other.
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Old 01-30-2021, 08:11 AM   #30
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Unless someone has 100% equities in their IRA you’d think they would have enough low volatility investments to cover their RMD which is under 5% of the portfolio value until you reach 79.
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Old 01-30-2021, 08:27 AM   #31
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Trust me, the worst thing about that time of life is NOT RMDs, it's being that old! Your custodian will tell you exactly how much you have to take to keep the Feds happy (with you.) I personally do a hefty (usually 20% withholding) on my RMD. That typically covers most of my un-withheld income for tax purposes. You'll figure it out easily and will give thanks that you have a 1st world problem (taking those darned RMDs)! YMMV
LOL!
Your making it easy and I like easy and simple the older I get! Thanks
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Old 01-30-2021, 08:35 AM   #32
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All inherited IRAs require ANY changes be made by a Fido rep. Traditional RMDs 100K+ require Fido intervention for ALL changes. We split that one 50/50 and can now make changes.
Hmmmm.... are you sure? I did DW's RMD from her mother's inherited IRA online in 2019.
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Old 01-30-2021, 08:36 AM   #33
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I think Streetís concern about market changes if you wait until late is that you could be selling assets that have dropped in value since the start of the year when your RMD amount was determined (prior Dec 31 value).

This can be handled in various ways. You can set aside the required funds inside the IRA early in each year and use those to fulfill RMDs during the year. You could draw from fixed income only and rebalance at the end of each year. You could decide it doesnít matter and sell proportionally from each fund for each RMD during the year - most brokerages allow this particular scenario as itís the easiest.

A key point is that the amount that has to be withdrawn each year is fixed by your age (at year end) and the prior Dec 31 value of your IRA. So you just have to decide which IRA funds it is going to be withdrawn from during the year.
Thank you also for the detailed RMD question I asked.

I would want an equal distribution of funds so to remain in that 75 to 80% equity status. In my case all this money at RDM time will be left for heirs. I don't plan of using it myself but of course life can change and that plan not fulfilled.
Still kind of a scary time for me when RMD are here.
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Old 01-30-2021, 08:54 AM   #34
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Never, I converted old roth IRA into taxable Vanguard index fund when I retired .I have no tax advantaged savings. All of my income (Retired military and VA disability) is considered "unearned" so I am not eligible for IRA and don't have to worry about RMD.
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Old 01-30-2021, 09:00 AM   #35
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Thank you also for the detailed RMD question I asked.

I would want an equal distribution of funds so to remain in that 75 to 80% equity status. In my case all this money at RDM time will be left for heirs. I don't plan of using it myself but of course life can change and that plan not fulfilled.
Still kind of a scary time for me when RMD are here.
If at RMD time you decide to reinvest the proceeds in your taxable account for your heirs, it doesn’t matter so much if equities are up or down. Yes, you’ll be out any withheld taxes, but in the long run either you or your heirs would have to pay those IRA withdrawal taxes anyway.

Fidelity even lets you withdraw assets in kind, so you aren’t actually selling anything, just transferring shares from the IRA to your taxable account. In this case, however, you won’t be able to withhold any federal taxes, and will have to pay estimated taxes from your non IRA funds.
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Old 01-30-2021, 10:05 AM   #36
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Traditional RMDs 100K+ require Fido intervention for ALL changes.
Unfortunately, my RMD amount is less than $100,000/year so that is the reason I didn't run into this particular issue.
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Old 01-30-2021, 10:12 AM   #37
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If at RMD time you decide to reinvest the proceeds in your taxable account for your heirs, it doesnít matter so much if equities are up or down. Yes, youíll be out any withheld taxes, but in the long run either you or your heirs would have to pay those IRA withdrawal taxes anyway.

Fidelity even lets you withdraw assets in kind, so you arenít actually selling anything, just transferring shares from the IRS to your taxable account. In this case, however, you wonít be able to withhold any federal taxes, and will have to pay estimated taxes from your non IRA funds.
Thanks so much for that information. I'm not sure what I would do at times with out the intelligence and knowledge you people have.
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Old 01-30-2021, 10:37 AM   #38
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I would have been taking RMD this year until the law change. Since I had already allocated the dollars, I just made the amount a Roth conversion. I did the conversion in January.
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Old 01-30-2021, 10:50 AM   #39
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Hmmmm.... are you sure? I did DW's RMD from her mother's inherited IRA online in 2019.
Yes. I went in to change the withdrawal date from Q4 to January. I received notification that I could not make the change online and to contact a rep. The rep advised that any and all changes to an inherited IRA cannot be made online and must be made by a rep. My inherited IRA was set up 15 years ago and this is the first time I've made a change. DH's about 4 years ago and again, first time we've attempted a change.

What type of change did you make?
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Old 01-30-2021, 10:50 AM   #40
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Our assets are 100% tIRA now. We draw cash ad hoc as we need it during the year to supplement SS, pay property taxes, QCDs, etc. Zero income tax withholding. Then in early December we pay safe harbor income taxes via tIRA withdrawals @ 100% withholding. After that we finish up with a draw to hit the RMD.
I like this method. Iíve just about used up all my after tax money and while not RMDís, Iíll be drawing mostly from my tIRA. Since I donít have to worry about managing income, my only reason to pay attention to my withdrawals is to estimate my taxes. Paying safe harbor seems easy and the way to go since I donít care if I have to pay or if I get a refund. I just donít want to pay a penalty.
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