When during the year to take RMD
When is the best time to take a small RMD?
I have heard people say they take it mid/late December so that their retirement funds grow tax free longer.
I have heard people say they take it earlier in the year so that they don’t forget or die before the RMD is taken.
For a large RMD some people have said to take monthly or quarterly distributions so that they have ongoing income. This can be calculated based on the total RMD amount and automated by the IRA custodian.
Your thoughts???
Permalink Submitted by Alan - IRA critic on Mon, 2014-08-11 02:47
It depends on your needs. The timing does have different effects, but those effects are beneficial for some and negative for others. If withholding is being used to pay taxes, then a late RMD will allow the withholding to be more accurate for the year. If a conversion is being done, the RMD must come first, so it would be better earlier in the year. If a QCD is being done, the QCD cannot be done after the RMD if the QCD is to eliminate taxes on the RMD. The point about passing and therefore missing the year of death RMD is not a major issue because beneficiaries can easily file a 5329 with their returns and the IRS will waive the penalty for a late RMD. On the other hand, if your beneficiaries are details challenged, once you get in poor health, an early year RMD may be preferable.