Strategy Question about RMD Withdrawals (55, pension, relative, retirees)
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Thinking ahead to when we have to start RMD's in a few years and I have a question about when in the calendar year to take them.....
Is it better to take the year's withdrawal early in the year, say January ??
Or to leave it in IRA til December for an additional 12 months of potential growth ??
Or perhaps a quarterly (or even monthly) deposit into our local checking ??
Have other Retirees found that one method is better ?? If you wait til December, you can possibly get some additional growth......but you will get taxed on that withdrawal right away. Taking in January, you have the use of the money all year before the tax bill comes due.
Or does it not really matter ?? Between my Pension and SS, most of our expenses are covered. It would seem that most of the RMD would end up in the Emergency Fund. I may be able to show some amount of 1099 Income, even after age 70 -- Can I stash the RMD in my Roth ?? Up to the amount of 1099, or can I Roth an amount above my total 1099 Income ??
When you start the RMDs during the first required year is less important than what you do now. I screwed up and pulled living expenses from my non-qualified accounts. Now I face relatively large RMDs and a huge tax hit. I would have been much better off, pulling from my qualified accounts and spreading the tax burden over more years.
When you start the RMDs during the first required year is less important than what you do now. I screwed up and pulled living expenses from my non-qualified accounts. Now I face relatively large RMDs and a huge tax hit. I would have been much better off, pulling from my qualified accounts and spreading the tax burden over more years.
Well first don't miss it. It's a 50% fine of the amount you need to take plus taking it and the taxes on that. You should plan to do it even on the year you turn 70 as if it were the mandatory year. That way you're not fumbling. If you miss the first year you just need to ask forgiveness but don't let it happen again. No forgiveness on second offense
Well first don't miss it. It's a 50% fine of the amount you need to take plus taking it and the taxes on that. You should plan to do it even on the year you turn 70 as if it were the mandatory year. That way you're not fumbling. If you miss the first year you just need to ask forgiveness but don't let it happen again. No forgiveness on second offense
I missed the first year. Got a letter from the IRS. I called. Was told not a problem just catch up when file this year.
Thinking ahead to when we have to start RMD's in a few years and I have a question about when in the calendar year to take them.....
Is it better to take the year's withdrawal early in the year, say January ??
Or to leave it in IRA til December for an additional 12 months of potential growth ??
I don't see how that is relevant at all. If you don't need the money from the RMD, just re-invest it in a non-tax-advantaged account in the same bonds or securities you had it in in your IRA or 401(k). IOW, if you have to sell 500sh of XYZ Corp to raise cash to withdraw your RMD, then just repurchase the same 500sh of XYZ in a regular taxable account. There won't be any loss of growth and you'll just be paying a couple of minor transaction fees.
I don't see how that is relevant at all. If you don't need the money from the RMD, just re-invest it in a non-tax-advantaged account in the same bonds or securities you had it in in your IRA or 401(k). IOW, if you have to sell 500sh of XYZ Corp to raise cash to withdraw your RMD, then just repurchase the same 500sh of XYZ in a regular taxable account. There won't be any loss of growth and you'll just be paying a couple of minor transaction fees.
Well, yes. The gist of my question was -- is it worth taking the RMD in January and investing in like-kind securities.....or is it better to leave it in the IRA til December ?? A small thing, but mine own.
Secondary Question was.....what's the limit of a Roth contribution ?? Can you contribute more than the 1099 Income in a given year ??
Well, yes. The gist of my question was -- is it worth taking the RMD in January and investing in like-kind securities.....or is it better to leave it in the IRA til December ??
Secondary Question was.....what's the limit of a Roth contribution ?? Can you contribute more than the 1099 Income in a given year ??
No you are allowed only 5500 per year. You can't use a conversion of IRA/401k in your RMD either.
An RMD must be taken in the year of death. If the deceased hasn't taken it, the heirs must, or else pay the penalty. This is often overlooked, so I understand that some people do "death planning" by receiving their RMD in January of each year.
The more I think about it, the more I'm leaning towards a January Payout. Not specifically for the "death planning" aspect, but just to account for RMD early in the tax year rather than later.
I'm thinking Fidelity may offer a Quarterly or even Monthly disbursement into our local checking account. Would still like to stash some of that into my Roth, for continued Tax Free Growth.
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