Instead of taking 2017 RMD in 4 equal payments, a large distribution was taken during the 1st quarter & taxes paid on that amount. The plan is to take the remaining required distributions in 3 equal amounts in the 2nd, 3rd, & 4th quarters. Is this plan problematic? Will there be any penalties?
Isn't it a little too late to be asking?When I look at this: http://www.investopedia.com/articles/retirement/05/strategic...I don't see any requirements that you take RMDs in quarterly distributions, just that each qualifying retirement account be treated individually. So my guess is that as long as you hit your requirements by the end of the year, you have met your obligation.FuskieWho notes many Fools delay their distributions until they have to take them in order to keep the money working for them as long as possible...-----Ticker Guide for The Walt Disney Company (DIS), Orbital ATK (OA), Titan International (TWI), Intuit (INTU), Time Warner (TWX)Disclaimer: This post is non-professional and should not be construed as direct, individual or accurate adviceDisclosure: May own shares of some, many or all of the companies mentioned in this post (tinyurl.com/FuskieDisclosure)Fool Code of Conduct: http://tinyurl.com/FoolCode
It doesn't matter when you take the RMD as long as you take it by the end of the year. And you may have had taxes withheld, but you won't pay taxes on it until you file your 2017 tax return in 2018.
It doesn't matter when you take the RMD as long as you take it by the end of the year._____________It might be wise to make quarterly estimated tax payments to take into account other forms of income you might have besides the RMDs, i.e., dividends, capital gains, SS, rental income, yada yada yada.
<<Who notes many Fools delay their distributions until they have to take them in order to keep the money working for them as long as possible...>>I have to take a small distribution every year, and one year I took the advice to delay until the end of the year (I was doing it in January prior to this change). Anyway, I completely forgot and then had to deal with the IRS to get my error excused (it was). I'm back to taking it at the beginning of the year, which works out well anyway, since it goes into our IRAs.Lesson: if you have a habit that works, it might be worth it to stick with it!Lisain MA
Somewhere(either here or the retirement investing board), a point was made that taking the while thing at beginning of the year could make it easier on your executor the year you die. I don't have the patience to try to search for it.
I would use Siri or Outlook or Alexa or some other tool to remind yourself when you have to take time-critical actions.FuskieWho hasn't found any articles encouraging retirees to take RMD distributions earlier in the year...-----Ticker Guide for The Walt Disney Company (DIS), Orbital ATK (OA), Titan International (TWI), Intuit (INTU), Time Warner (TWX)Disclaimer: This post is non-professional and should not be construed as direct, individual or accurate adviceDisclosure: May own shares of some, many or all of the companies mentioned in this post (tinyurl.com/FuskieDisclosure)Fool Code of Conduct: http://tinyurl.com/FoolCode
CMF_Fuskie: "Who hasn't found any articles encouraging retirees to take RMD distributions earlier in the year..."I have not saved them, but I have seen them.As you know, RMDs are based upon value of the account as of 12/31 at the close of the prior year.Those who suggest early in the year RMD distributions are wanting to protect against the account having a bad year, and then reaching December and being required to take out the RMD based on substantially larger prior YE balance.The counter-argument is that leaving THE RMD in late allows the IRA to grow, and does not affect that year's RMD because it is based on prior YE balance.For example, assume RMD is 5% and YE account balance is $1M. RMD is $50k. Take it our in early January of next year, and market suffers 30% loss though December 1; account balance would be $665K (.7[$1M - 50k]). If you did not take the RMD early, current account balance is now $700K, but RMD is still $50k, or 7.14% of current balance, and after RMD you have an account balance of $650k, or 15k less than the early withdrawer (assuming that early withdrawer did not take RMD in-kind and continue to hold same assets). I analogize as similar to those with big Stock option gains who do not sell enough stock to cover income taxes that will ultimately be due, and then the stock drops significantly, making it much more difficult to raise funds pay taxes when they become due. Regards, JAFO
"When I look at this: http://www.investopedia.com/articles/retirement/05/strategic...I followed your link and in reading the article I got very confused. It seems to imply that you can withdraw (distribute) actual shares of stock rather than dollars. Is that possible? "you can cull dead-weight assets from them by either liquidating the assets or distributing them from your IRAs. . . . - distributing instead of liquidating them could keep ticket charges (transaction fees) from being taken out of your IRA balance. . . . "- then "If the assets lose value after being distributed from your IRA, the upside is that you may be able to write off the losses - which would not have been an option had the losses occurred while the assets were in your IRA."Is any of that accurate? I have never seen that mentioned as an option from any other source.JimA
I followed your link and in reading the article I got very confused. It seems to imply that you can withdraw (distribute) actual shares of stock rather than dollars. Is that possible? Yes. It's called an 'in-kind' distribution. Is any of that accurate? I have never seen that mentioned as an option from any other source.Yes. It's just like any other stock you buy in your taxable account. Your holding period begins the date that the distribution is made, and the basis is the value of the stock that was distributed, NOT the price you purchased it for in the IRA. There are several recent threads over on the Retirement Investing board that mention in-kind distributions.AJ
It appears that isn't the only source that says so.If you choose to take a distribution in the form of stock, your cost basis per share is the average trading price on the date of distribution from your Traditional IRA. This is the amount that will be reported to you as taxable income from IRA distributions on your Form 1099-R at the end of the tax year.http://www.costbasis.com/stocks/iradistribution.htmlHere’s something that I bet you’ve never run across – when you have to begin taking Required Minimum Distributions (RMDs) from your IRA or Qualified Retirement Plan (QRP), most folks think you must take these distributions in cash.This is not the case, you can actually take distributions of any sort, not just RMDs, from your plan (IRA or QRP) in either cash or “in kind”. By “in kind”, this means that you can take the actual securities (stocks, bonds, or other investments) from the account. These distributions in kind can be used to satisfy your RMD for the year. There can be both pros and cons to taking distributions in kind.http://figuide.com/does-your-required-minimum-distribution-h...
I decide when to take the RMD based on several factors. If I don't have specific plans for the money, I'll pull it out early, have taxes withheld and contribute the maximum to my Roth IRA for the previous year. I still have earned income so can contribute to a Roth IRA. Contributions to a traditional IRA are not allowed after age 70 1/2.If I have specific plans for the money, I'll pull it out when the event happens. Last year it was a new roof and deck. This year it is interior painting and maybe some landscaping. Next year I think it might be some international travel.Otherwise I take it out in November when the property taxes are due.I just talked to my money guy yesterday as he thinks I should rebalance my account and we decided that I should take it now as my account has done well since the first of the year and he thinks a correction in the markets is due.
This one may be a little dated but http://ibd.morningstar.com/article/article.asp?id=700587&...has a reasonably good summary of timing of RMDs.
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