Fair Warning..Conventional IRA vs Roth

Fair Warning..Conventional IRA vs Roth

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  #21  
Old 01-07-2019, 01:57 PM
retiredguy123 retiredguy123 is offline
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Another thing to consider when you start taking your RMDs is whether or not all of your traditional IRA money is taxable. Some people made IRA deposits or transfers with after-tax money. If so, a percentage of their RMD is not subject to income tax. This percentage would be shown on your last Form 8606 filed with the IRS as part of your tax returns.
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  #22  
Old 01-07-2019, 02:06 PM
Boomer Boomer is offline
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Quote:
Originally Posted by Ladygolfer93 View Post
You are so right ! I was never a particularly high earner but a Roth never made sense for me. It really depends on your circumstances, do you work for a public or private sector, all kinds of considerations. For some it is indeed a good vehicle, but certainly not for most at all. My major concern is HOW MRD's are figured, WHEN they are figured, etc. I am quite frustrated with the variety of answers I have received by Fidelity (depends on which rep you get on which day as to the answer). One Vanguard rep just said she really was not sure !
Will my new MRD be figured on my balance on Jan. 1, 2019 ? Even my tax preparer gave an answer different from the two brokerages mentioned ? Dah !!
Hi Ladygolfer,

The RMD amount to take for 2019 is figured on the balance in the IRA on December 31 of 2018.

If you Google the question of how to determine the amount, you will find information, including the IRS publication. But the info can look a little convoluted at first glance, and second glance, on some of the sites.

If you have reached RMD age or if it is arriving in 2019, and if your IRA is on deposit in an account you can see online, you might find the amount is already calculated and posted there for you — for that account only.

If you use bank CDs, the bank’s computers should already have that amount calculated, too. It could appear on a statement or you might need to contact them for the amount — again, for that account only.

Something to keep in mind is to be clear to understand that if you have multiple accounts, and those accounts are all of the same type of IRA, the RMD from all can be totaled and the entire RMD taken from just one of the accounts. (Once again, my disclaimer: Please check anything I say with an actual accountant — that would not be me.)

Someone in this thread made the excellent point of not getting into having to sell stock to pay taxes. Good advice. One thing that can help is to allow dividends to accumulate instead of reinvesting them or to maintain liquid cash somewhere else but in the same type of IRA account.

(Geez. I have no idea why in the world I like to talk about taxesz-z-z-z-z. I think I need an intervention. I will try to shut up now. But first, be forewarned, once more, that it is entirely possible that I have no idea what I am talking about.)

Last edited by Boomer; 01-07-2019 at 02:20 PM. Reason: Typos
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  #23  
Old 01-07-2019, 02:23 PM
retiredguy123 retiredguy123 is offline
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It is an excellent point that, if you have multiple traditional IRA accounts, you do not need to take money from each account to satisfy the RMD, even if each custodian makes a separate RMD calculation. The only RMD calculation that matters is the total for all accounts. You can take the money from any of the accounts to satisfy the RMD. If possible, it makes a lot of sense to consolidate all of your IRA money under a single custodian, who can calculate your RMD every year, and make it easier to not make a mistake.

Last edited by retiredguy123; 01-07-2019 at 03:14 PM.
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  #24  
Old 01-10-2019, 09:29 AM
tanderse tanderse is offline
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I have kind of a follow-up question to this thread. Can a person merely pay the owed taxes (out of current income) based on the calculated RMD each year without actually selling the stock, bonds, 401k, IRA, etc.? It seems to me like such a hassle and expense to sell the required RMD amount and then put the balance back into an investment, probably the same investment.
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  #25  
Old 01-10-2019, 11:14 AM
Vladimir Vladimir is offline
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Quote:
Originally Posted by retiredguy123 View Post
It is an excellent point that, if you have multiple traditional IRA accounts, you do not need to take money from each account to satisfy the RMD, even if each custodian makes a separate RMD calculation. The only RMD calculation that matters is the total for all accounts. You can take the money from any of the accounts to satisfy the RMD. If possible, it makes a lot of sense to consolidate all of your IRA money under a single custodian, who can calculate your RMD every year, and make it easier to not make a mistake.
Someone may also want to verify this. I believe that if you have a 401K plan along with a traditional IRA you must also take an RMD from the 401K plan and it must come out of the 401K plan. This would be a separate calculation and withdrawal from your traditional IRA
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  #26  
Old 01-10-2019, 01:06 PM
retiredguy123 retiredguy123 is offline
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Originally Posted by Vladimir View Post
Someone may also want to verify this. I believe that if you have a 401K plan along with a traditional IRA you must also take an RMD from the 401K plan and it must come out of the 401K plan. This would be a separate calculation and withdrawal from your traditional IRA
I was just talking about a traditional IRA, not a 401K. But, if you are retired, you can transfer the 401K funds into a traditional IRA. When I retired from the Federal Government, I immediately transferred my entire TSP account into my traditional IRA.

Last edited by retiredguy123; 01-10-2019 at 01:14 PM.
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  #27  
Old 01-10-2019, 01:11 PM
retiredguy123 retiredguy123 is offline
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Quote:
Originally Posted by tanderse View Post
I have kind of a follow-up question to this thread. Can a person merely pay the owed taxes (out of current income) based on the calculated RMD each year without actually selling the stock, bonds, 401k, IRA, etc.? It seems to me like such a hassle and expense to sell the required RMD amount and then put the balance back into an investment, probably the same investment.
You have to actually transfer the RMD funds out of the IRA. But, you may be able to move specific stocks and bonds from an IRA account into a non-IRA account, without actually selling them.
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  #28  
Old 01-12-2019, 02:30 PM
Boomer Boomer is offline
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Quote:
Originally Posted by tanderse View Post
I have kind of a follow-up question to this thread. Can a person merely pay the owed taxes (out of current income) based on the calculated RMD each year without actually selling the stock, bonds, 401k, IRA, etc.? It seems to me like such a hassle and expense to sell the required RMD amount and then put the balance back into an investment, probably the same investment.

Quote:
Originally Posted by retiredguy123 View Post
You have to actually transfer the RMD funds out of the IRA. But, you may be able to move specific stocks and bonds from an IRA account into a non-IRA account, without actually selling them.

Hi tanderse, and thank you, rg123 for your answer.

I have not done this, but it is something that interests me.

(I have said it before and I will say it again -- it is a good idea never to put yourself in the position of having to sell stock to pay taxes. Cash on the side can protect the investments, but here we have more to the story.)

Taxes on such a transfer would, of course, be on the face value of the shares on the date of transfer and not on just the gain.

It is necessary to understand all the moving parts in this one -- like cost basis -- but it can be a really good idea.

Anyway, I am linking here an article on the topic. The source is Kiplinger. I like articles from Kiplinger because I think they communicate well for those of us who just want to learn some things but we do not want to wade into esoteric territory.

I hope this link helps.

Boomer

Retirees, Shift Stock to Satisfy Your RMD

Last edited by Boomer; 01-12-2019 at 02:36 PM.
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