Satisfaction of RMD over 2 years

Submitted by Howard Hook on Sun, 2021-12-19 23:26

Taxpayer turned age 72 in 2021 with an RMD from their IRA in amount of $28,000.
In reviewing 2021 and projected 2022 income it makes sense tax wise for the taxpayer to satisfy $10,000 of the RMD in 2021 and the balance ($18,000) in 2022 (by April 1, 2022).

Is that ok to do or is the only choice to either satisfy entire RMD in 2021 or take entire RMD by April 1, 2022
In other words can the RMD be split over the two years (assuming the portion taken in 2022 is done so by April 1, 2022)

Thanks as always
Howard



Submitted by Alan - IRA critic on Sun, 2021-12-19 23:51

Any combination is allowable, the deferral of the first year RMD can be done in whole or in part. In fact, often due to taxes on SS income, it is possible for a partial RMD in year 1 to generate lower total taxes over the 2 year period than the more usual distribution of each year’s RMD in that same year. You likely need a tax program to model the ideal income split, and this is the best time to do that since 2021 taxable income is pretty clear this late in the year, and 2022 taxable income can also probably be estimated fairly accurately for most retirees. However, it is notable that the portion of the 2021 RMD deferred will increase the 12/31/2021 balance and therefore slightly increase the 2022 RMD. And the lower RMD tables also kick in for 2022, but not for any portion of the 2021 RMD that is deferred.

Submitted by Howard Hook on Mon, 2021-12-20 00:39

Thanks Alan. I am using tax software and everything is teed up – was just waiting to make sure we could split RMD. RegardsHoward

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