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What I have been reading about RMD did not make it clear that the year I am required to take a distribution, the amount is determined by the PREVIOUS YEAR'S balance at year-end. That makes sense now. But somehow my brain didn't figure that out because there was no specific wording to that effect. I knew the calculation was based on a year-end balance, but which year-end?
In my searches, I saw where T Rowe Price has digital RMD tools if you have an account with them. I'm sure other firms have similar. It said they have an Auto-RMD Tool to automate your distributions and you can easily customize the dates, frequency and details of your distributions. You will receive access to these tools once you reach the age you are required to start taking RMDs.
They also have a RMD Dashboard that keeps you informed including your total and remaining RMD amount for the year and a status to help you see where you are at for the year.
Also understand that you do not have to take an RMD from each IRA, but rather the total of all your RMDs withdrawn must be equal to or greater than the sum of each individual RMD.
For example, if you have five separate IRA accounts, you can take the total RMD from any or all of these accounts. I use my RMD to rebalance my portfolio.
Each investment manager will calculate an RMD for the assets at their institution, but you don't have to take the RMD from each account.
The RMD rules apply to all employer sponsored retirement plans, including profit-sharing plans, 401(k) plans, 403(b) plans, and 457(b) plans. The RMD rules also apply to traditional IRAs and IRA-based plans such as SEPs, SARSEPs, and SIMPLE IRAs. The RMD rules do not apply to Roth IRAs while the owner is alive.
As a practical matter, if you have all the above accounts at one location (e.g., Fidelity), then Fidelity will calculate the RMD for you and make sure the RMD is transferred to wherever you want it to go (e.g, a taxable Fidelity account, to a bank, etc) at the appropriate time.
I have a few years before I have to take out RMDs.
I'm confused about how to do this.
Isn't it calculated using the balance at year end (December 31)? Don't I have to take the distribution that same year?
I realize that the first RMD I would have until April 1 of the next year to take the distribution for the year I turned 73. If I do that, don't I have to take another distribution that same year based on December 31 balance?
As a practical matter, you find your value Dec 31 of the prior year. Depending on the account may take a month for an annuity to calculate the Fair Market Value & send you the letter. So you may take your RMD anytime from January thru December.
Depends what you want to do with the money. You may put it in a taxable account & spend it. You may leave it in the account & have the balance grow or fall during the year. If you let it go could have higher balance for the next year. The AARP RMD calculator is good for projecting what the amount could be for future years.
Simply put, your RMD for year 2025 is calculated using the balance as of 12/31/2024.
RMD for year 2026 is calculated using the balance as of 12/31/2025, and so on.
And yes, if you defer your initial RMD into the year following your 73rd birthday, you will have two RMDs that year, but the initial RMD will be based on the year-end balance of the year preceding your attaining age 73 and the second RMD will be based on the year-end value of the year you attain age 73.
Also, if folks plan to go that route (pulling two RMD in one year), they need to be careful that the total amount of the RMDs added to their other income does not cross the thresholds for the Social Security tax torpedo or the Medicare payment.
Also, if folks plan to go that route (pulling two RMD in one year), they need to be careful that the total amount of the RMDs added to their other income does not cross the thresholds for the Social Security tax torpedo or the Medicare payment.
There may be enough warning over doing 2 RMD in one year to prevent that.
One way to minimize the impact may be to have some distribution a year early. Any amount may reduce your RMD a year earlier. The fund co may take 10% withholding to help some with the taxes you will pay.
Are you old enough for RMD? I've been on it for about 10 years already.
not yet , but my wife is
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