Tax Planning Before Turning 70: What You Should Know About RMDs (55, spouse)
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This is a very small and to the point posting on the net that everyone here should know. It has been spoken of and I have said it myself a few times here as well and to my friends. This is what it says.
Quote:
RMDs: The Devil in the Details
Keep in mind:
1. Defined Contribution Account owners may be able to wait until retirement to file a report.
2. Those who turned 70 ½ in 2015 must report a RMD before April 1, 2016 – unless they turned that age in the first half of the year. If that’s the case, the first RMD report must be made before December 31st of this year.
3. First year reporters who wait to report in April will be required to report twice (which could raise tax obligations) because they are required to report an RMD again before December 31st. This is why it’s important to begin tax planning for RMDs at age 69.
After the first year, IRA owners are required to report annually by year’s end.
4. Life expectancies of the taxpayer and the taxpayer’s spouse will play a factor. See the IRS’s resources for calculating RMDs for more information, but it essentially comes down to the taxpayer’s account balance the preceding year’s end, divided by an IRS life expectancy factor.
5. Taxpayers who have forgotten to take RMDs in the past should take all of them as soon as possible, because of the excise tax mentioned above.
Retirees and other tax payers who don’t need their RMDs might consider reinvesting those funds into a Roth IRA, which won’t require withdrawals until after the account owner passes, or a grandchild’s 529 college savings account. And there are other planning tools available to help reduce your taxable estate. Simply speak with your accountant or trusts & estates attorney for more information.
Last edited by oldsoldier1976; 12-06-2015 at 07:49 AM..
^^^^^ How could taxpayers have "forgotten" to take RMD's? I thought the investment companies were required by law to calculate the RMD's and send them to you. I must be mistaken.
Yes, if you enroll in our automatic withdrawals process, Fidelity will automatically recalculate your MRD each year, and distribute that amount based on your instructions.
The trouble is if you have multiple accounts with multiple companies you will get those but must add all account balances together then determine your RMD. There are a lot of people that have only one account as well as a lot of people that have multiple. The mistakes are made mainly by those that have multiple. Also in the case of married folks both of their accounts are taken into that same picture. This is even more tricky depending on ages of the couple and whether or not one is retired and the other is working.
had i known years ago that the rmd's were a combo of my age and my wife's i would have canvased the local colleges for my choice in a wife .
Is this true? Does the wife has to be at least 10 years younger? I thought RMD is just base on my husband's age only. Because I have my own IRA.
Anyway I plant to use one small IRA in the first 2 years. That leaves only one IRA for Vanguard to take care, much easier to do RMD. That's how I deal with multiple accounts.
Thank you, this is something new for me. I need to go read the link.
Edit to add that you can use the joint survivor expectancy is your spouse is 10 years younger, otherwise use the single life expectancy. Since my husband is not 10 years older, I can't use that table, where am I missing?
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