Timing for IRA RMD’s
I have a Traditional. non-deductible IRA from which I have been taking RMD’s for many years.
Typically I take a single distribution as late in the year as possible, with part of this distribution taken as QCD’s.
Is there a preferred time and timing for these annual withdrawals?
Thank you, and please keep your Ed Slott newsletter coming.
Alan D
Permalink Submitted by Alan - IRA critic on Mon, 2022-05-16 15:38
This is a personal decision. Some people tend to take the RMD earlier in the year and some late for various reasons, although taking it “as late as possible” should exclude dates after mid December to avoid missing the distribution due to late year backlogs,holidays, etc. If you need to RMD for living expenses, then you would take it either early in the year or in periodic partial distributions. You might also take the RMD early if you just feel better getting it off your plate for the year, or late in life if your health is failing to remove the year of RMD issue for your beneficiaries to resolve. If you pay your taxes by withholding from your RMD, you may want to take it later when you have a better idea of the amount you want to withhold.
You have basis in your IRA and therefore are filing Form 8606 to get credit for prior non deductible contributions. QCDs come from your pre tax balance, therefore are not included in the 8606 which calculates the taxable amount. Hopefully, you are reporting this correctly. You also need to be sure to complete your QCDs before you complete your RMD, but that is fairly simple if you just take a single distribution.
Permalink Submitted by Alan Durfee on Fri, 2022-05-20 20:23
Your 1st paragraph makes it sound like it’s purely personal decision, but It also touches on my reason for delaying til December to take a single RMD – estimating my current Fed taxes with my RMD added to it.The second paragraph mentions having a basis in my IRA, which I have none, therefor no Form 8606.It also states that My QCD’s should be completed prior to completing RMD. This, really answered myquestion about timing – thank you.
Permalink Submitted by Dan Zaehring on Sat, 2022-05-21 18:39
Since you used the phrase “non-deductible traditional IRA”, it would presume that the non-deductible funds would create basis. Sounds like you don’t have any non-deductible money in your IRA. The near year end scheduling of your IRA has value if you are waiting to see your projected tax situation before deciding on the amount of your RMD which should be a QCD for the year.