RMD rules
I turn 73 later this year (2024) and I plan to take distributions quarterly. My wife is a few years younger so her RMDs start in 2027. In calculating my RMD for these first few years, I think it’s based on the previous year-end balance of my IRA alone and does NOT include her 457 plan. Both are “individually” owned, yet we are jointly liable for the income tax.
IF I had to use the combined year-end balances, my RMD would be much higher, plus if her’s were calculated the same way, the sum of the both would be double what I’m expecting.
When her time comes, her RMD will be based on her 457 plan year end balance. Also, her RMD must come from her 457 and we cannot take both of our RMDs from my IRA. If we did, her RMD would be “missed” and a penalty would apply.
Please let me know if I am correct, when you get a chance to fo so.
Thank you VERY much for providing this Q&A service ! Happy New Year !
Permalink Submitted by David Mertz on Tue, 2024-01-02 02:29
You are correct. RMDs are individual obligations based on the previous year’s year-end balances of the individual’s retirement accounts.
Permalink Submitted by Donna Messinger on Tue, 2024-01-09 19:11
This gentleman you responded to said that “he would turn 73 in 2024 and would begin his distributions on a quarterly basis”. THAT, and ONLY that caught my eye. I’m not concerned about the spouses situation. So, here’s my “I’m confused” question. I just turned 71 in Dec 2023, which means I will turn 72 the end of this year(2024). I thought that you were required to take your first distribution by April 1, following the year you turned 72 (which would be by April 2025 for me). Additionally, because you “delayed” your first distribution, then you are ALSO required to take your 2025 distribution by year end as well. Am I mis-informed? Thank you Alan. I sure wish the IRS regulations would be clearer on this topic.
Permalink Submitted by Alan - IRA critic on Tue, 2024-01-09 20:07
You will turn 73 in 2025, and 2025 will therefore be your first RMD year. While you could postpone all or part of the 2025 RMD until 4/1/2026, as you indicated you would then be taxed on both your 2025 and 2026 RMDs in 2026, and that’s typically not beneficial. That said, some people have irregular taxable income years and it might be worth determining if you would benefit by delaying the 2025 RMD, or part of it. That determination would best be made in early in Dec, 2025 when you already know your 2025 income and may have a good estimate as to your 2026 taxable income.
Permalink Submitted by David Mertz on Tue, 2024-01-09 20:14
The SECURE 2.0 Act changed your first RMD year to being the year you reach age 73.