Did your CFP tell you about IRMAA? (Income Related Monthly Adjusted Amount):
When recipients of Medicare have an AGI that crosses certain thresholds, the government adds extra charges to Medicare premiums. The hit comes two years after the tax filing. For a couple, filing jointly, those AGI thresholds have been starting at $170,000. I realize most retirement incomes do not cross into such amounts, but a big RMD in one year could throw some taxpayers into paying a lot more for Medicare, if they are not aware of this possibility and take out a big chunk of change with a willingness to take a tax hit but without having all the pieces of the puzzle.
Also, do you know about the QCD? (Qualified Charitable Distribution). If you are charitably inclined and have reached RMD age, you might look into using a QCD. The contribution must go directly to a qualified charity. It cannot go to a donor-advised fund. The QCD became a permanent part of the tax law in 2015. It was around before that, but Congress would decide to do it from year to year and often last minute which made tax planning harder.
Part of the beauty of a QCD is that it counts toward the RMD but incurs absolutely no income tax because the amount of the QCD never appears as part of the AGI. But the guidelines must be followed perfectly with good record keeping. Also, a QCD could come in handy to stay under those Medicare premium thresholds while meeting an RMD requirement that could throw you over.
As I understand a Roth Conversion, the amount transferred can be done only after the RMD required amount has been met.
If any of this info interests you as you plan for your RMD, you can find lots of info with a Googling, or of course, with a tax accountant.
I know. I sound like I just gave you a homework assignment. (But please keep in mind that I am not a CPA or CFP or anything of the sort so please do your homework.)
