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Old 11-27-2019, 06:13 AM
l2ridehd's Avatar
l2ridehd l2ridehd is offline
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Join Date: Dec 2007
Location: Bridgeport At Miona Shores
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There are many options for you and everyone's situation is a bit different. A lot depends on your current taxable income, your RMD amount, your medicare premium, and your estimate tax burden over the next several years. If you trust your CPA than follow his advice. You should always ask about QCD's, Roth conversions and any other options you and your CPA can think of, but taxes are hard to avoid. I personally could never make a IRA to ROTH conversion work. Even using the backdoor method didn't make sense.

When I retired I had a 10 year tax problem due to a rabbi trust. This also caused me to end up with the highest medicare payments allowed. And now it is causing RMD's to be taxed at the highest rates. I got two more years until the trust is fully paid out and I can develop a different plan. My current RMD goes 100% to taxes and for the first time in my lifetime I got a tax refund. I basically use it to pay my estimated quarterly taxes. In two more years I will change that and look at the ROTH and QCD's again.

One other point to bring up and that is the Medicare amount looking at 2 years past AGI. That is how they do it. However if you can demonstrate that your AGI will have a dramatic change in taxable income, the local SS office can and will adjust the amount you pay in medicare premiums. When I receive my last rabbi trust payment I will take that zero balance statement to the SS office and get my medicare payment reduced for the following tax year. It will drop that monthly hit from around $500 to around $120. So about a $4000 annual savings. This would include the part D penalty savings.

I only point these options out to demonstrate that it is a complicated question and getting a good CPA that you trust to review all options is your best choice.
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