RMDs, IRMAA and Roth Conversion
I turned 73 last month and have 2 IRAs in 2 different brokerage firms.
Can I just take 1 RMD from 1 IRA this year while take 2 RMDs from other IRA next year?
Does it matter if I take RMD this year from a smaller/larger IRA?
I estimated it will take 4-6 years to do annual RMD and Roth conversion while paying some IRMMA. In general, is it better/tax wise to avoid IRMMA at all cost or pay the price and get it over with? My goal is to leave as much asset to my heirs.
Permalink Submitted by Alan - IRA critic on Fri, 2024-05-10 17:03
RMDs for IRAs can be aggregated, which means that your total RMD can be taken in any combination from any of your IRAs. Most frequently, this is applied by taking the total RMD from just one of multiple IRAs. You must complete the total RMD for all owned IRAs before converting from any of them. If you want to also do any QCDs, you should also complete the QCDs before completing your total RMD. QCDs to any approved charity are more tax efficient than donating from your savings, particularly if you cannot itemize. Most seniors do not have enough itemized deductions to exceed the standard deduction.
Your question about IRMAA has no simple answer, but you could figure your IRMAA surcharge and convert it to a marginal tax rate to be added to your marginal rate without IRMAA. Conversions are often done up to the top of the current marginal rate, but the IRMAA tiers are totally different, resulting in added complications to determine the limits you want to convert. A further complication is that the IRMAA surcharge is applied using the MAGI from 2 years prior, so you know your MAGI, but you will not know what inflation adjustment is made to the IRMAA tiers until shortly before the IRMAA year starts.