RMD soon .... amt to CD ladder

[gayl]

I don't know if this is the right thread to ask but ~~~

How does RMD work? Is it the same amount every year? Who tells IRS what it is? I'm trying to position so I don't have to sell anything to withdraw RMD until 2031 / 2032. I already went from 100% total stock market index last year to 82% SCHB, 15% 7 yr CD ladder (2025 - 2031), & 3% tax free bonds in February. I'm wondering if I should shift another 2% to tax free bonds or if that's like closing the barn door after the horse has escaped

FWIW my pension covers living expenses, my SSA covers travel expenses

 

[audreyh1]

The RMD amount is based on the value of your total IRAs on Dec 31 each year. The amount you must take is based on your age reached each year and increases. So it varies each year. How to calculate your RMD including the all important RMD table: IRA Required Minimum Distribution (RMD) Table for 2025. Many brokerages have tools for calculating this, but you must make sure all your IRAs are included.

No one tells the IRS what your RMD is, but they can calculate it because they get reports from your IRAs with year ending values.

You have to start taking RMDs the year you reach 73, but that first year you can postpone the withdrawal until April 15 the following year, however you have to take the second the same year so most people avoid doubling up taxable income that way.

 

[gayl]

Thank you for the explanation including the age change. I haven't heard from Schwab, will they tell me how much to take out?

 

[aja8888]

Thank you for the explanation including the age change. I haven't heard from Schwab, will they tell me how much to take out?

Yes, they will tell you. It will also be shown on the "Take RMD" tab. Very simple.

 

[audreyh1]

Thank you for the explanation including the age change. I haven't heard from Schwab, will they tell me how much to take out?

I recommend that you go online at Schwab and read their tutorials on RMD. Most brokerages have lots of RMD information available to their customers.

 

[erkevin]

Schwab has an IRA RMD calculator

 

[Car-Guy]

You have to start taking RMDs the year you reach 73, but that first year you can postpone the withdrawal until April 15 the following year, however you have to take the second the same year so most people avoid doubling up taxable income that way.

What Audreyh says is correct, but be careful if you decide to defer your first years RMD's until the following year. Just be sure it doesn't "unknowingly" push you into the IRMAA tax trap.

 

[aja8888]

One thing to note is if you plan on doing a Roth conversion in the year you take your RMD, you must take the RMD first.

 

[Al18]

I’m confused by your original post. 100% of your RMD is taxable - same as any withdrawals from an IRA. Doesn’t matter what you’re invested in. The only way to avoid paying taxes is to do a QCD.

 

[gayl]

Oops. I see where the confusion comes from. I have (by %) at Schwab:
Non-retirement brokerage: 48% (SCHB, PWZ, 10% 2 yr CD ladder @ 5+%)
2nd non-retirement brokerage for college: 2% (SCHB, PWZ)
IRA: 40% (SCHB + CD ladder ave 4.35%)
Roth: 10% (all SCHB)

But when like things are lumped together:
SCHB 82%
CDs 15%
PWZ 3%

Cash is in my bank so doesn't count

 

[38Chevy454]

Only pre tax IRA has required minimum distribution, with the amount calculated per the IRS tables referenced and explanations of the previous replies. You can also take out more than RMD, just not less, without concern as long as RMD amount is covered.

Your after tax brokerage and Roth accounts do not have RMD. You can also withdraw from your pre tax IRA before age 73, don't have to wait until RMD is required. Also as stated any withdrawal from pre tax IRA is going to be 100% taxable to you.

It's great that your normal living expenses are covered by your pension and travel is covered by SS.

 

[38Chevy454]

Just thought of something else to add. Even though you have to take the RMD, and pay taxes on it, you can just put that back into your after tax brokerage account if you do no need or want to spend it. The key point is just that Uncle Sam wants to force you to take some out, so he gets his taxes on it sooner than later. Once it is after tax money you can reinvest it into your brokerage account. Or use it for a larger one-time lumpy expense like a big house repair project or new car or

 

[Koolau]

Don't be surprised if your RMD amount goes up significantly year to year. The denominator keeps decreasing based on the IRS tables discussed above. But also, your remaining funds in the tIRA may increase significantly (as they generally have over the past several years). That's what we call a "First World" problem.

One advantage of the recent pull-backs is that (if they continue) your RMDs might actually go DOWN. I call that a lose/win situation.

 

[Souschef]

One way to reduce taxes on your RMD is to do Qualified Charitable Donations (QCD). It counts as RMD, but it is not taxable.
I use it extensively to donate to various organizations.