Talk of The Villages Florida - Rentals, Entertainment & More
Talk of The Villages Florida - Rentals, Entertainment & More
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Required Minimum Distribution
2022 required minimum distributions for IRAs got locked in at the end of 2021 when markets were high. It's not hard to imagine markets will still be lower at the end of 2022. Are there any suggested strategies in this situation to prepare for the distribution? Maybe in kind distributions from the IRA to the brokerage account is the best strategy?
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#2
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#3
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Other side - Unlikely taxes will be any lower than today.
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#4
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the following year your RMD will be lower due to the market decline...so maybe between the two years your RMD's will even out if the tax bracket stays the same for you
you're going to have to take the RMD...what you do with the money once Uncle Sam get's his cut is up to you the comment about the charity might be a way to dodge the tax...but I'd check with your tax advisor to make sure that applies even if you do or don't itemize...the tax rules seem to change from year to year... |
#5
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You are asking a question that I bet a lot of people are going to have at the end of the year. You have just thought of it sooner.
If the market is down in December, and if you do not have enough cash inside IRAs to protect stocks from having to be sold to pay the RMD, that would not be ideal, of course. I would ask an accountant about whether an “in kind” transfer would be a way to pay the RMD based on the amount of the face value of the stocks transferring. (If you can do in-kind.) But later if you want to sell the in-kind shares, I have a feeling they come in dragging their cost basis with them, thus invoking a cap gain tax. Possibly a biggun. You should find out about that. Dividend investors can let some of that income accumulate in cash inside the IRA and then use it for the RMD when the time comes, so they don’t have to sell stocks to pay taxes. That cash is like a moat around the stocks to protect them from having to be sold or transferred out to a taxable account. (If you are charitably inclined anyway, look into using a QCD for part of the RMD. The advantage of the QCD is that it is not added into the AGI. But it would not help you keep your stocks. It would just save some income tax.) Sounds like you are in “Be Prepared” mode. What you are talking about here (in May) will probably sneak up on some people in December. Get professional advice and good luck with finding the most effective thing to do. (And maybe think about building that moat of cash inside an IRA. Even though the ROI on cash is absurd, your stocks would be protected.) You probably already know that if you have more than one traditional IRA, the total RMD from all of them can be paid out of just one of the accounts. (Check me on that one, too. But, so far, I am not writing these posts from tax jail.) Boomer Last edited by Boomer; 05-04-2022 at 03:32 PM. |
#6
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It does not matter whether you itemize or not. When you donate a Qualified Charitable Distribution, it counts toward your RMD, and does not count as income to you. Be sure that the funds go directly from your retirement account to the charity. You must not receive the funds. Simply call your charity and let them know that the funds are on the way. If you donate regularly, (perhaps to your church or temple) you can satisfy your annual tithe this way. |
#7
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Interesting discussion, if you can take a loss against an RMD, I will need to discuss with financial advisor and tax expert. I do not have a clue.
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Pennsylvania, for 60+ years, most recently, Allentown, now TV. |
#8
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A planning device often not used for maximum efficiency
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#9
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#10
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Retiredguy123, good point, I was not really thinking about that, Oh well..........
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Pennsylvania, for 60+ years, most recently, Allentown, now TV. |
#11
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#12
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Your RMD is calculated, you can take it out at any time, you can change the date to tomorrow if you want.Taking it out when the market is higher is a better strategy, because as the account falls in size, then you are taking out a larger percentage of the total value. (I mentioned this point in a prior post as it would suck for many people if the market fell 50% before you took your RMD based on the highest value at the end of last year.)
The second question is after you pay your taxes, investing the remaining RMD back into productive investments will help continue to grow your taxable assets, which have a different tax basis with long term gains and tax free dividends, up to a limit. With a large account and significant RMD, pay your taxes, you were successful, and try to avoid drawing down any taxable account assets, and you will have a nice rainy day or travel fund to draw on if necessary. Or, gift the money away now to family members who can use the extra money more than you can at this point. We don't know your whole financial portfolio and lifestyle needs. I manage my parent's estates and trusts, and I took the RMD and invested into continue to grow their estate for now private pay dementia facility, which my mom likes and is very close to us. She has 20 years of private pay facility costs in her taxable estate, which I have not touched as the IRAs are paying for it with large medical expense deductions for zero taxes paid on the IRA income. She is 95 so I doubt she will use it all. . good luck |
#13
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you can take your RMD and just put it into another bank account. you don't have to spend it
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#14
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Erroneous statement
Someone posted that ....."All earnings from an IRA are taxed as ordinary income."
This is not true. Earnings accumulate TAX FREE in an IRA.....and it is DISTRIBUTIONS from the IRA to the owner that are taxable. |
#15
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Correct, but the thread is about RMDs, which are distributions.
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Closed Thread |
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