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Author: tedhimself Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121179  
Subject: RMDs Date: 3/3/2011 11:07 PM
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I will start taking RMDs in 2011. Since these distributions are taxed as regular income, and since I make estimated tax payments do I need to take) my distributions quarterly so that I will have paid in the proper amount each quarter to avoid penalty? (or at least pay the proper amount of tax quarterly if I do not take the distribution in quarterly installments?) Do I need to do this on a specific form?

I can't seem to find this discussed on the IRS site but it must be there somewhere.
Ted
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Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 112558 of 121179
Subject: Re: RMDs Date: 3/3/2011 11:23 PM
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I will start taking RMDs in 2011. Since these distributions are taxed as regular income, and since I make estimated tax payments do I need to take) my distributions quarterly so that I will have paid in the proper amount each quarter to avoid penalty? (or at least pay the proper amount of tax quarterly if I do not take the distribution in quarterly installments?) Do I need to do this on a specific form?

You do not have to take your distributions quarterly. You do need to make the appropriate quarterly estimated payment, but there are several ways to calculate what you need to pay and you can choose the method that yields the lowest payment. You might want to take a look at annualized income calculations. There are several calculators out there. Edcosoft, who often posts here, has a good one.

Ira

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 112559 of 121179
Subject: Re: RMDs Date: 3/3/2011 11:37 PM
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Have you considered having taxes withheld from the distribution?

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Author: tedhimself Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 112560 of 121179
Subject: Re: RMDs Date: 3/3/2011 11:55 PM
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Have you considered having taxes withheld from the distribution?

I guess I don't understand how this changes anything except that I don't have to deposit part of the distribution check in the bank. Won't the same taxable amount of my distribution get to the government either way?
Ted

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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 112561 of 121179
Subject: Re: RMDs Date: 3/4/2011 12:46 AM
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I guess I don't understand how this changes anything except that I don't have to deposit part of the distribution check in the bank. Won't the same taxable amount of my distribution get to the government either way?

Unlike quarterly tax payments, withholding is treated as if it is sent to the IRS evenly throughout the year. So you could delay your RMD until Dec, 2011 and, assuming that the RMD is at least the amount of the safe harbor payment that you need to send to the IRS to avoid penalties for underpayment, you could have the entire amount withheld from the RMD and not have to make quarterly payments at all. Here's an article from Fairmark that has some additional details: http://www.fairmark.com/estimate/withhold.htm

AJ

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Author: edcosoft Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 112570 of 121179
Subject: Re: RMDs Date: 3/4/2011 11:23 AM
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Advice: Take your full and only RMD in December and have them withhold the amount of your prior year's tax. do not pay any installments. No underpayment penalty, Maximum tax deferral. Maximum IRA tax avoidance. No checks to write and mail. You can take partial RMDs earlier but make sure there's enough left to cover the above withholding. Check with your RMD provider. MOst will do this on a veerbal order to make the RMD and withdrawal concurrently. Many seniors do this

ed

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 112574 of 121179
Subject: Re: RMDs Date: 3/4/2011 2:01 PM
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Won't the same taxable amount of my distribution get to the government either way?

Yes, it is the same taxable amount. Isn't withholding assumed to be even across the quarters, where estimated tax payments aren't? Depending on how you choose to take the RMD, the only advantage is it might make the withholding/estimated taxes easier to manage.

The only IRA RMD form I have seen is Fidelity. It allowed selecting which months you wished to take the distribution. The distribution would be pro-rated across the number of distributions during the year.

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