RMD question

[pb4uski]

+100 In our case we do not give to charities ...... while we are alive. Instead as we have no heirs or anyone that we care to give money to, we have 3 respectable Charities in our will. They are ones with at least 85% going to the cause. As opposed those that spend the majority of their donations on advertising and undefined overhead, we have read their financials. One never knows when unexpected expenses arise, we would rather be prepared.

As a aside, my uncle's trust is going to 3 of their favorite charities and 2 individuals. We set it up so the 3 charities are the beneficiaries of their traditional IRAs. The distribution of the brokerage account is then adjusted so the end result is that the total money is split 5 ways, but in a more tax efficient way.

Example below assuming $1m brokerage account and $300k in IRAs.

​	IRAs​	Brokerage​	Total​
Charity 1​	100​	160​	260​
Charity 2​	100​	160​	260​
Charity 3​	100​	160​	260​
Individual 1​	0​	260​	260​
Individual 2​	0​	260​	260​
Total​	300​	1,000​	1,300​

 

[OldShooter]

The safe harbor rule

If you pay at least 90% of the taxes that will be due, that is a safe harbor too. We did that for 2024 taxes because our 2023 income was quite a bit higher than 2024, so I did not want to tie up 110% of the 2023 value and then get a big refund.

https://www.hrblock.com/tax-center/irs/tax-responsibilities/avoiding-underpayment-tax-penalty/

 

[camfused]

Perhaps this is a good method: take your QCDs and any other expenses needed for the year, at the beginning of the year. Then, do 100% withholding withdrawals at the end of the year, once you understand your yearly tax obligation. Of course make sure that between the two periods you take out at least the RMD amount.

 

[audreyh1]

Just to clarify that they all add up to meet the RMD amount.

 

[ducky911]

If taking RMD early is better why not take more than the min. out early keeping in mind to stay below next tax range.
I take it late, it is burned into me to max out what I can get/keep into my ira. Like you I don't spend the money.

 

[Graybeard]

If taking RMD early is better why not take more than the min. out early keeping in mind to stay below next tax range.
I take it late, it is burned into me to max out what I can get/keep into my ira. Like you I don't spend the money.

You can but the more you take the more taxes you pay so there's that. Why take more than required if you don't need the money? I don't need it in fact if there was no RMD I'd probably never take a distribution.

 

[engineernerd]

If taking RMD early is better why not take more than the min. out early keeping in mind to stay below next tax range.
I take it late, it is burned into me to max out what I can get/keep into my ira. Like you I don't spend the money.

My two cents...

Interest income is taxed as ordinary income, so it makes sense to keep the fixed-income part of your portfolio in tIRAs and defer the taxes on that interest (i.e. not take out any more than you have to).

I also think that if you can take stock-type assets out of your tIRA in an attractive tax bracket, why not do a Roth conversion? Zero tax on all your future investment returns seems like the best deal to me. Note that the RMD itself is ineligible for Roth conversion.

 

[audreyh1]

We have mostly fixed income in our IRAs (the slowest growth portion of our portfolio AA) so the whole timing issue is basically moot.

 

[target2019]

I pick up pennies wherever I find them.

 

[TheWizard]

If taking RMD early is better why not take more than the min. out early keeping in mind to stay below next tax range.
I take it late, it is burned into me to max out what I can get/keep into my ira. Like you I don't spend the money.

I do take a bit more out after completing my RMD, but as a Roth conversion. The reason for doing this is to slow my progression towards the next higher IRMAA tier...