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RMDs #15689707 01/22/21
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For those expecting a market correction, you may want to consider taking them earlier than later this year.


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Re: RMDs [Re: Old_Toot] #15689953 01/22/21
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In my case, RMD is based on last year's figures - not earnings this year. Anyone have a different take?


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Re: RMDs [Re: CCCC] #15689974 01/22/21
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Originally Posted by CCCC
In my case, RMD is based on last year's figures - not earnings this year. Anyone have a different take?


I believe you are correct, RMDs are based on the number in the acct at the end of 2020.


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Re: RMDs [Re: Natty_Bumpo] #15690112 01/22/21
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Originally Posted by Natty_Bumpo
Originally Posted by CCCC
In my case, RMD is based on last year's figures - not earnings this year. Anyone have a different take?


I believe you are correct, RMDs are based on the number in the acct at the end of 2020.


This.


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Re: RMDs [Re: Old_Toot] #15690424 01/22/21
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there are several ways to calculate rmd but all are based on ending value of the year previously which would be 12/31/2020


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Re: RMDs [Re: RoninPhx] #15691340 01/22/21
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Originally Posted by RoninPhx
there are several ways to calculate rmd but all are based on ending value of the year previously which would be 12/31/2020


Pretty much (in the main) limited to the age factor used to calculate.


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Re: RMDs [Re: Old_Toot] #15691375 01/22/21
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From what I understand, you did not have to take any RMD for 2020.
I don't need mine, so they are invested right back into my portfolio.


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Re: RMDs [Re: Old_Toot] #15691414 01/22/21
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Because of the ChiCom flu RMD's were not required in 2019 and 2020. I didn't take mine. Saved quite a bit in taxes.


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Re: RMDs [Re: Old_Toot] #15691416 01/22/21
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Originally Posted by Old_Toot
For those expecting a market correction, you may want to consider taking them earlier than later this year.

Agreed!
Just took all of my RMD's for the year, while the Dow was still at 31K. It is a matter of time before Grandpa Biden finds some way to throw a wrench in things to the point that the market begins to react.


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Re: RMDs [Re: Old_Toot] #15691602 01/22/21
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Why take an RMD if you don't have to and pay tax on it?

If you want out of the Market you can easily move money out of stocks into cash or bonds WITHIN you tax free account. No Tax consequences.


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Re: RMDs [Re: Old_Toot] #15692510 01/22/21
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Seems like quite a bit of misunderstanding about a fairly simple thing..


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Re: RMDs [Re: Spanokopitas] #15692836 01/23/21
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Originally Posted by Spanokopitas

Why take an RMD if you don't have to and pay tax on it?

If you want out of the Market you can easily move money out of stocks into cash or bonds WITHIN you tax free account. No Tax consequences.


I believe that you do have to take it from 2020 in this year, 2021.

If we can possibly not have to take it this year for 2020 then we should be able to return to our accounts as was done last year.

If you know any specifics about NOT having to take the 2020 RMD in this calendar year please do inform us.


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Re: RMDs [Re: Old_Toot] #15692911 01/23/21
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According to Forbes and Motley Fool the RMDs are back in force for 2020 to be taken this year, 2021.

So, back to the OP about taking them early this year with the market presently being somewhat high.

Any other info or suggestions are most welcomed.


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Re: RMDs [Re: Old_Toot] #15693950 01/23/21
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I'm only an ignorant amateur with this stuff, and my simple understanding is that the overall amount of your RMD to be "taken" in 2021 is calculated on the basis of a snapshot of your account value on a certain date - I think ending of 2000. Unless the reg/method changes, the same would be true for the RMD in 2022 - based on value of account at end of 2021.

1. If someone is saying that the date on which one chooses to "take" the RMD during 2021 would affect its amount, I don't understand that idea.

2. If someone is talking about management of the account for balance and effect on earnings during 2021 as we normally try to do in dealing with interest fluctuations - the timing of one "taking" the 2020 based RMD could have effect on the 2021 final snapshot and, thus, the RMD outcome as"taken" in 2022.

Which would it be?


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Re: RMDs [Re: CCCC] #15694117 01/23/21
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Originally Posted by CCCC
I'm only an ignorant amateur with this stuff, and my simple understanding is that the overall amount of your RMD to be "taken" in 2021 is calculated on the basis of a snapshot of your account value on a certain date - I think ending of 2000. Unless the reg/method changes, the same would be true for the RMD in 2022 - based on value of account at end of 2021.

1. If someone is saying that the date on which one chooses to "take" the RMD during 2021 would affect its amount, I don't understand that idea.

2. If someone is talking about management of the account for balance and effect on earnings during 2021 as we normally try to do in dealing with interest fluctuations - the timing of one "taking" the 2020 based RMD could have effect on the 2021 final snapshot and, thus, the RMD outcome as"taken" in 2022.

Which would it be?

As a person who has had to do RMD withdrawals from retirement accounts for the past 4 years, I know a bit about it-

The amount of an RMD to be taken in any given year, if you are old enough to have to do it, is based upon two things: The value of the retirement account at 12/31 of the previous year, and a divisor, based upon published IRS timetables, that determines the amount of the RMD for the present tax year.

As far as the date the RMD is taken, here is an example: Say your year-end value was $100,000, and the RMD tables says you must take out $5,000, as an example. That number is a fixed value. What is not fixed, however, is the value of that account in the present tax year. It may be higher than the $100K, or it may be lower, due to market fluctuations. Now, if you take out the $5K when the value of your account is, say, $110,000, you are left with $105,000 in that account, to continue to work for you. If, however, the market tanks, as it periodically does, and the value of your account at the time of your RMD is, say, $80,000, you are left with only $75,000 to continue to work for you. That is why it is advantageous to do your best to try to time your withdrawals.


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Re: RMDs [Re: Old_Toot] #15694221 01/23/21
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Thanks for that view. I'm no experienced "expert", but that is the same scene I see. Two different issues - one is RMD amount, other is investment management. Difficult to understand why there would be such apparent divergence or confusion.


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Re: RMDs [Re: Spanokopitas] #15694385 01/23/21
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Originally Posted by Spanokopitas

Why take an RMD if you don't have to and pay tax on it?

If you want out of the Market you can easily move money out of stocks into cash or bonds WITHIN you tax free account. No Tax consequences.


Perhaps with a view that tax rates will rise in the future.


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Re: RMDs [Re: EdM] #15694993 01/23/21
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Originally Posted by EdM
Originally Posted by Spanokopitas

Why take an RMD if you don't have to and pay tax on it?

If you want out of the Market you can easily move money out of stocks into cash or bonds WITHIN you tax free account. No Tax consequences.


Perhaps with a view that tax rates will rise in the future.


Guaranteed, Ed.


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Re: RMDs [Re: Old_Toot] #15695561 01/23/21
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My 401k s are with Vanguard, have been for years. They automatically transfer the proper amount out and into my taxable Prime Money Market fund.

Last year (2020) through a misunderstanding they took my RMD. My CPA told me to put the money back in the 401k and he would treat it as a "rollover" on my 2020 return. Fixed it, no tax liability.

I don't think it has been decided whether or not RMDs will be required for 2021. Stay tuned.

A valid point can be made about taking and paying now if you expect taxes to be radically higher in future years. But, if they are and you reinvest the money you will be paying the higher taxes on your gains rather than letting your money grow tax free in the 401k. To me it seems better to leave it in the 401k and let it grow tax free.

Another option would be to take it out, pay the tax, and put it in a Roth.

These are questions better answered by your CPA or EA who has knowledge of your personal circumstances.


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Re: RMDs [Re: Old_Toot] #15695621 01/23/21
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