Final RMD Thoughts?

[marko]

Just want to make sure that I've got this all down:

I'll be 73 this coming year.
I need to withdraw $X from my IRA and pay the taxes on that.
I can do it as a lump sum right up until December 31, 2025, take it out monthly or in any fashion that suits me.
I will be withdrawing an amount larger than what my RMD is supposed to be (that's my usual spending) but I don't need to identify the RMD as such as long as the total withdrawals exceed the RMD.
My administrator will send me some sort of tax document (?) in early 2026 for the IRS showing that I've satisfied the requirement. They will also have reported such to the IRS. (Or is that just the standard 1099R?)

Is that it in a nutshell?

 

[jebmke]

Standard 1099-R; the custodian of the IRA has no specific knowledge as to whether you have complied with your RMD requirements.

 

[marko]

Standard 1099-R; the custodian of the IRA has no specific knowledge as to whether you have complied with your RMD requirements.

So how does the IRS know how much I need to withdraw? I'd assume the custodian sends them my year end balance, right? Wouldn't take much to then see if I met the amount in a single account.

Regardless, thanks for the info.

 

[audreyh1]

Yes, the custodian must send them the year end balance of your IRAs each year. You should also have a copy. If you have multiple custodians the IRS will get them from each.

 

[cathy63]

So how does the IRS know how much I need to withdraw? I'd assume the custodian sends them my year end balance, right? Wouldn't take much to then see if I met the amount in a single account.

Regardless, thanks for the info.

Each of your IRA custodians sends a 5498 to the IRS in May every year. That form tells the IRS how much you would need to withdraw for an RMD if that were your only IRA. The IRS could add up the RMDs from all the 5498s they get to figure out what your total RMD is; and they could compare that to your actual withdrawal shown on the 1099-Rs you get in the following January to make sure you complied. As far as I know, they don't actually do this unless you happen to get selected for an audit. As with many tax things, they just expect you to be honest and follow the rules on your own.

 

[bada bing]

Only one gotcha I know about. If you have money in 401K, the RMDs for those are on an account basis. Your IRA RMD is calculated as a global total, if you have more than one. In other words, an IRA custodian doesn't know how much in total you hold in IRAs and doesn't know how much you may have withdrawn from IRAs at other custodians.

 

[Al18]

You could withdraw money from your IRA this year, if you want to do a RothIRA conversion.

 

[marko]

You could withdraw money from your IRA this year, if you want to do a RothIRA conversion.

I withdraw money from my IRA every year for the past 13 years. Roth doesn't work for me.

 

[Graybeard]

I would not wait until 12/31! Even if you do it online, the transaction has to settle in 2024. I would do it now. Since you are 73 this is your 1st RMD you can delay it into 2025 but if it settles in Jan 2025 you need to take your RMD for 2025 and the income from 2 RMDs in 2025 probably will push you into a higher tax bracket and may result in a visit from Aunt IRMAA 2 years from now.

 

[marko]

I would not wait until 12/31! Even if you do it online, the transaction has to settle in 2024. I would do it now. Since you are 73 this is your 1st RMD you can delay it into 2025 but if it settles in Jan 2025 you need to take your RMD for 2025 and the income from 2 RMDs in 2025 probably will push you into a higher tax bracket and may result in a visit from Aunt IRMAA 2 years from now.

Appreciate the reply, but as noted in post #1, I'll be 73 this coming year....in 2025. Even if it were the case, my normal IRA withdrawals exceed my RMD.

Been on IRMAA since day one anyway.

 

[camfused]

Just want to make sure that I've got this all down:

I'll be 73 this coming year.
I need to withdraw $X from my IRA and pay the taxes on that.
I can do it as a lump sum right up until December 31, 2025, take it out monthly or in any fashion that suits me.
I will be withdrawing an amount larger than what my RMD is supposed to be (that's my usual spending) but I don't need to identify the RMD as such as long as the total withdrawals exceed the RMD.
My administrator will send me some sort of tax document (?) in early 2026 for the IRS showing that I've satisfied the requirement. They will also have reported such to the IRS. (Or is that just the standard 1099R?)

Is that it in a nutshell?

You may add to this that you can do a 100% for taxes withdrawal to satisfy the owed taxes too.

 

[audreyh1]

That’s right, you don’t have to identify the RMD on any document or tax form, you just have to meet or exceed it each year.

The 1099R sent in Jan just shows the amount you withdrew the prior year. It doesn’t indicate whether you met the RMD either or even that you are subject to RMD. It will just show that you took a normal distribution (since you are >59 1/2) and the amount.

 

[marko]

An update: Logged onto my T.Rowe Price account the other day. "Like magic", there's a page with my total RMD for this year along with an amount and percentage of how much I've already withdrawn (I withdraw a set amount the first of each month) and how much more to go.