RMD Questions ????

[street]

Example:

If I turn 70 in Dec. 8th, 2018 when do I need to take my RMD? The way I read it I would have to take it by the end of Dec. in 2019. Is that correct? I would be 71 years of age instead of 701/2. Then going forward I would have to take RMD every Dec. from then on.

 

[MissMolly]

Example:

If I turn 70 in Dec. 8th, 2018 when do I need to take my RMD? The way I read it I would have to take it by the end of Dec. in 2019. Is that correct? I would be 71 years of age instead of 701/2. Then going forward I would have to take RMD every Dec. from then on.

You have to take it in the year you turn 70.5 years old. So if you turn 70 in Dec 2018, you must take your first RMD in 2019 (Although actually the first year you can delay until the following April, 2020, but then you still have to take the RMD for 2020 also, so you would be taking two that year). Not necessarily in December, just sometime in the during the year. And future RMDs are also not required to be taken IN December, just no later than December of each year.

 

[kaneohe]

Example:

If I turn 70 in Dec. 8th, 2018 when do I need to take my RMD? The way I read it I would have to take it by the end of Dec. in 2019. Is that correct? I would be 71 years of age instead of 701/2. Then going forward I would have to take RMD every Dec. from then on.

You need your RMD in the yr you turn 70.5 which is in 2019. For the 1st RMD only, you can delay until April 1 of the yr after all or part of the 1st RMD. However you still must take the 2nd RMD in 2020 regardless even if you delay the 1st.

 

[audreyh1]

Example:

If I turn 70 in Dec. 8th, 2018 when do I need to take my RMD? The way I read it I would have to take it by the end of Dec. in 2019. Is that correct? I would be 71 years of age instead of 701/2. Then going forward I would have to take RMD every Dec. from then on.

Of course you can take it at any time during 2019. Some people do it quarterly, for example.

It’s also important to note that your RMD in 2019 will be based on the Dec 31, 2018 value of your portfolio.

Technically that first RMD can be delayed until the April 1 of of 2020, but you would have to also take the second RMD by Dec 31, 2020. Personally I wouldn’t want two RMDs in one year.

 

[street]

Of course you can take it at any time during 2019. Some people do it quarterly, for example.

It’s also important to note that your RMD in 2019 will be based on the Dec 31, 2018 value of your portfolio.

Technically that first RMD can be delayed until the April 1 of of 2020, but you would have to also take the second RMD by Dec 31, 2020. Personally I wouldn’t want two RMDs in one year.

Thanks so much for confirming how I understood the law. Very well explained thank you.

 

[mickeyd]

RMD is a requirement to pay taxes, not a requirement to spend.

 

[Independent]

Your RMD is lower a year later. Doesn’t affect the first RMD after a market swoon but does drop subsequent ones.

I remember them suspending RMDs for 2008, was it? For one year.*

I don’t worry about selling in a down market due to IRA withdrawal. Because a) I get to withdraw more shares to satisfy the RMD if required and b) I can always buy anything I sold right back in taxable accounts after IRA withdrawal.

Covering taxes in a down market is always a problem though. My instincts would be to move some IRA funds to a low volatility investment shortly after Dec 31 established the RMD if I didn’t want to use taxable account funds to pay the taxes. “Just in case”.

Thanks. I can see that my first instinct on this was wrong.

Re the bold, it seems that in most years the market is up. If I move assets that I plan to use for taxes to a low volatility investment, and my regular assets go up, I'll miss out on the gain that I would have had. On average, I'll do better by just letting the money accrue in my regular AA.

 

[gerntz]

Example:

If I turn 70 in Dec. 8th, 2018 when do I need to take my RMD?

Here's hoping that all those that do turn 70 Dec, 8, 2018 actually do so.

 

[gerntz]

RMD is a requirement to pay taxes, not a requirement to spend.

Not true. Depends on income level.

 

[mickeyd]

Not true. Depends on income level.

That's a good observation. Is there anyone here that exercises their RMD who does not pay taxes on that distribution?

 

[frayne]

RMDs are really nothing more than a way for SAM to get his tax revenue back, albeit later and hopefully at a lower rate.

 

[gerntz]

That's a good observation. Is there anyone here that exercises their RMD who does not pay taxes on that distribution?

Here? I suspect not since most all have saved/invested to ER which overwhelming is enough to pay income taxes.

 

[Hermit]

If you take your RMD in the form of a Qualified Charitable Distribution, QCD, you do not pay taxes on it. I will do this for a few years.

When I take RMDs as income, the minimum taxes will be 22%. In a few years it will move me into the next higher tax bracket along with higher payments for Medicare. It will be tough, but I guess I will learn to live with it.

 

[Souschef]

That's a good observation. Is there anyone here that exercises their RMD who does not pay taxes on that distribution?

Not I, but a lady I do taxes for has low enough income, with the standard deduction and SS not being taxed, that she pays no taxes.

 

[kcowan]

Had to laugh when I read where you can reduce your RMDs by marrying a much younger woman. I doubt if this took into account cutting your portfolio in half as wife No.1 exits the picture to make way for much younger wife No.2 !

Wife1 was exiting anyway, so ended up trading down 8 years. Why not?