topic Re: Required Minimum Distribution 2020 in Community Chat

Required Minimum Distribution 2020

itsmagic — Sat, 18 Jul 2020 13:04:40 GMT

I understand that per the CARE Act we aren’t required to take a RMD this year. I’m kind of wavering though. We had earmarked it (before the virus came along) for a special purchase this year which we can put off. But on the other hand I think about how short time is now (my husband is in his 70s and I’m almost 70) and should we just enjoy it and not wait. Is anyone else wavering on their RMD this year?

Re: Required Minimum Distribution 2020

granddi — Sat, 18 Jul 2020 13:30:30 GMT

Talk to you financial advisor. See if you have any opitons for assessing your money without the taxes incurred by withdrawal

Re: Required Minimum Distribution 2020

Allegheny — Sat, 18 Jul 2020 13:44:59 GMT

The last time we discussed it, my husband is considering waiving. His is not substantial and we really do not need it. I view it this way, if you had planned on taking it to finance a special project then the Care Act waiver should make no difference.

The recommendation to speak with your financial advisor (if you have one) is excellent. He/She might know of benefits to not taking it now or vice versa.

Re: Required Minimum Distribution 2020

Still Raining — Sat, 18 Jul 2020 14:03:57 GMT

I seem to hang out with tax folks, and they are all atwitter with this.

There can be cases when the credits/deductions/brackets are just right so the amount will be "tax free". Then withdrawing an specific amount would be appropriate.

True ever year and fun for retired types.

Re: Required Minimum Distribution 2020

BlueFinch — Sat, 18 Jul 2020 14:06:23 GMT

@itsmagic Yes, I'm wavering, too, while crunching numbers re: pros and cons. I'm just glad the choice is ours, this year. I resent the RMDs.

Do what's best for you and your finances. If it's been planned and earmarked for this year, I don't see any reason why you'd decide to wait.

If this 'special' purchase will bring joy, or benefit you, it may be just what you need during these bleak times.

However, we're burning through this year and it'll be 2021 before we know it. So, after NY, we will have a better picture of the direction we'll be heading on many levels. We may find that saving on taxes this year was a bonus we should have taken.

I think I'll hold out, since I was planning for some home improvements, but I don't want people working around my home during the pandemic, anyway, unless it's an emergency.

Whether we take the RMD this year, or not, will depend on each individuals needs, or wants, instead of being forced to comply. I sure hope I didn't confuse you more. There's no concrete answer right now. Good luck.

Re: Required Minimum Distribution 2020

Mom2Dogs — Sat, 18 Jul 2020 14:10:53 GMT

@itsmagic If is something you really want/need...I'd go ahead a do it.

We always roll the money back into our account, we have yet to need it...your financial advisor should be able to help you.

Re: Required Minimum Distribution 2020

Isobel Archer — Sat, 18 Jul 2020 14:17:53 GMT

I'm no financial expert, but I strongly suspect - due to the shutdown and the riots - we are going to see substantial tax increases at the state and local level - and possibly if the outcome is such - at the Federal level.

"Tax free" may be a thing of the past.

Re: Required Minimum Distribution 2020

millieshops — Sat, 18 Jul 2020 14:15:33 GMT

@BlueFinch I also don't love the RMD's, but I know they are price we pay for not paying taxes for years and years on the value of our IRA's.

Re: Required Minimum Distribution 2020

BlueFinch — Sat, 18 Jul 2020 14:30:25 GMT

@millieshops wrote:
@BlueFinch I also don't love the RMD's, but I know they are price we pay for not paying taxes for years and years on the value of our IRA's.

I'm not suggesting it should be tax free income. I resent that there's no flexibility.

Maybe I'd like to skip a year and take twice the amount the second year. It would significantly increase my taxes for that year, but it would be my decision and perhaps better fit my own needs.

It's not going anywhere. They eventually WILL get their taxes, one way, or another.

Re: Required Minimum Distribution 2020

ROMARY — Sat, 18 Jul 2020 16:07:31 GMT

I'm not waiving mine, as long as I can get into the bank to my rep. before Dec 31.

Re: Required Minimum Distribution 2020

BirkiLady — Sat, 18 Jul 2020 20:05:18 GMT

I'm 72 and plan to live many, many more years. Skipping a year of RMD's makes me very happy. I resent the government telling me how to handle those investments.

It was a pleasure this year to know my sister was young enough to take advantage of the new age (70) of having to begin paying taxes on her RMD's.

If you are questioning the decision, talk with your broker and tax preparer who know your situation. They will be able to advise you far better than strangers on a chat forum. Best wishes on getting professional answers.

Re: Required Minimum Distribution 2020

KaySD — Sat, 18 Jul 2020 20:40:33 GMT

The reason there are RMDs is that you were able to defer taxes on that income for years so you could save to retire--but you still owe taxes on that income, so you have to start taking out a bit every year and adding it to your taxable income.

To me, there's nothing to resent in this, since you've already benefitted from the deferral all along. In fact, it's a great program for anyone who is lucky enough to have it. Most employer pensions and individual IRAs and annuities work the same way.

Whether you actually end up paying income tax on it is determined by your other income and deductions each year, as you know.

So if it won't hurt you in the long term to take it anyway, go ahead! It IS nice to have the choice this year.

Re: Required Minimum Distribution 2020

EatWell — Sat, 18 Jul 2020 21:27:33 GMT

@itsmagic wrote:
I understand that per the CARE Act we aren’t required to take a RMD this year. I’m kind of wavering though. We had earmarked it (before the virus came along) for a special purchase this year which we can put off. But on the other hand I think about how short time is now (my husband is in his 70s and I’m almost 70) and should we just enjoy it and not wait. Is anyone else wavering on their RMD this year?

@itsmagic

Consider you and your husbands current state of health, if you have medical issues, and heaven forbid, how much longer you think or your Dr. thinks you or your husband have.

Discuss tax consequences RMD deferral with your financial adviser. Your tax bracket.

If your planned purchase is something that will make your quality of life better, and make you happy, then make that special purchase.

I myself am deferring my 2020 RMD. I do not resent taking the annual RMD because I have benefitted financially from years of tax deferred income , good stock investments, and dividend reinvestment, when my tax bracket was much higher than it is now. 👍

Good luck.

“Stay safe. Stay home.”

~Put food in front of me, and I will eat it.~