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Ahh. Yes. You are correct. I knew that but was thinking a year out. That was why I was contemplating the option of collecting 6 months retro in March of my 70th year, because a very large SS would not affect my taxes that year, because of no RMD. The following year, RMDs plus SS plus pensions will easily exceed our expenses (projected), which then allows us to build up a significant after tax portfolio to replace what we drew down from pre-tax by delaying. Just keeping the options open.
Yes, we were only mentioning issues pre-70, as in my case where I will turn 70 in Feb (of 2028!) . If I file in Feb, my first check in March will be for all credits from FRA through age 70. Say that number is $4000/mo. But the reality is that for every month I delay from FRA until 70, my SS increases $19.50/mo. So if I file one month earlier than my birth month, in Jan, my check will only $3980.50. But I get an additional check (in Feb) for $3980.50. Just every subsequent check is also $3980.50 instead of $4000.
Even with reasonable inflation a lump sum of almost $4k is a lot. But $20/mo may be insignificant.
So in your case, you would look at what your check will be at 70 OR look at what your check would be minus 0.02667 times your age 70 check (4x 0.006667) and compare having that amount times 4 for a check that is 97.333 of your age 70 check. In my example, if my birthday was in April, I would get an extra $15,573, but my checks from then on would be $3893, or $107 less than waiting until May for my first check. Until I get there, and know my tax, health, portfolio, actual expenses, etc. status, I can only guess which is the better option. Like me, you turn 70 1/2 in the same year you turn 70, so RMDs come in to play. And the tax consequences with it. There is no cut and dry correct answer.
Perryinva,
Sorry, your message contradicts Mathjack, see above. From his message I understood there is nothing to worry, just apply for SS benefits in April (my birthday). SS does NOT delay full payments, if you turn 70.
Yes ,hitting age 70 is an exception to having to wait until january of the following year to get recalculated once you are past fra. Once you hit 70 you get everything due you even in mid year.
I wasn't contradictory at all. I was just explaining where the thread had drifted to about filing in Jan pre 70, and the reasons when you might want to file for an immediate lump sum, vs maximizing your monthly check. At 70, you "lose" no DRCs temporarily, lime you always will pre -70 except for Jan filing.
^^ The lump sum for 6 months of 69.11, versus 70…..certainly worth thinking about
From 65 to 70 I'll be living off of just a pension, and savings from a house sale (and topping out my tax bracket with IRA withdrawals, just to get my eventual RMDs down) -- so I'll need to be careful IF I pull out 401K money AND go for the lump sum.
But it's good to know what unintended consequences to be one the lookout for….
Damn you PerryinVA (just kidding of course)-- now I have to do a "break-even calculation" on 69.11 and 70! And how long THAT will take. And we all know how we looove those break even discussions.
Reminder: your first RMD must be taken by APRIL first of the year AFTER WHICH, you turned 70-and-a-half.
(NOT the year IN which you turn 70 1/2.)
(Not this year, but) With my birthday in mid june, that makes for 70 1/2 in December. I have until April first of the year I'ill turn 71 to take the RMD.
If you turn 70 1/2 in Jan-March -- you have not until that April -- but more than a year until the NEXT April to take your RMD!
For those considering taking their first RMD between Jan 1 and April 1 of the year after they are 70.5, be aware that your 2nd RMD must be taken by Dec 31 of the same year. (And all later RMDs by Dec 31) This means you will be reporting TWO RMDs as taxable income in the same tax year.
"The April 1 deadline only applies to the required distribution for the first year. For all subsequent years, the RMD must be made by Dec. 31. So, a taxpayer who turned 70½ in 2014 and receives the first required payment on April 1, 2015, for example, must still receive the second RMD by Dec. 31, 2015."
So it is generally best to take the first RMD by Dec 31 of the year you turn 70.5. Don't wait til the next April 1.
Good info thanks! Is you first RMD still based on the value on Dec 31 of the previous year? So if you take two the following year instead are they both based off the same date or one for two years earlier and one, one year earlier?
Good info thanks! Is your first RMD still based on the value on Dec 31 of the previous year? Yes
So if you take two the following year instead are they both based off the same date No
or one for two years earlier and one, one year earlier? Yes
Have fun !
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)-- now I have to do a "break-even calculation" on 69.11 and 70! And how long THAT will take. And we all know how we looove those break even discussions.
