For those expecting a market correction, you may want to consider taking them earlier than later this year.

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.

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.

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.

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.

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.

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.

Seems like quite a bit of misunderstanding about a fairly simple thing..

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.

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.

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.

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.

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

Guaranteed, Ed.

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.

I love when Covtards try to appear smart 🤣🤣

You never have to concern yourself with appearing smart, Flave.

Never, not even maybe.

You might want to read the Motley Fool and what Forbes has to say about it.

It could be bad to assume tax free growth at this point in time, tax protected or otherwise.

Jmo

Deacon Dave, dumas s

Wino Flave, you dumbassed f’k.

Further to the thought of taking money out to avoid higher taxes in the future:

Assume you take an RMD of 100k. Also assume you are in the 20% tax bracket. You now have 80k to invest. So you must gain 20k to breakeven, then you must gain even more to profit because you will be paying the higher tax rate you sought to avoid. Doesn't make a lick of sense to me.

If you had left the 100k in it would go on making gains at the same rate as the 80k you took out.

Spano, you’re assuming gains. There’s also negative tax free “gains “ if your investments falls in value.

Look up what the penalties are for not taking a RMD.

I’m not contesting your math at all. What you say is true,,,,IF.

But all that aside, we will be taking the 2020 RMDS this calendar year.

Do what you must.

There is no penalty for not taking your 2020 RMD.

If you take the money out when you don't have to and reinvest it you are immediately in the hole for the amount of taxes you paid. If investments made with that RMD money fall in value you are further in the hole (by the amount of tax paid) than had you left the money in.

If you do not take money out and your investments go down, they are valued exactly the same as if you had taken the money out. BUT, and this is a big BUT you have not paid the tax so you are ahead by the amount of taxes you would have paid.

The reverse applies if your investments go up.

To me it makes sense to not take an RMD unless required or you need the money for other than investment purposes, say to buy a second or third home or more guns.

You old farts should be discussing trusts, not your puny RMD's.

The rehab facility will soon be taking it all as your oldest daughter has to write them a five figure check monthly.

Us Old Farts can easily afford monthly five figure checks and more. And, yes, we all have Trusts. Trusts are for people who have significant assets.

No need for you to worry your pretty little head about trusts. Just keep adding to your asset base; Aluminum...Beer cans that is.

I think that you’ll find that you are now required to take your 2020 based RMD (formula applied to total amount of IRA at the close of 12/31/2020). in this 2121 calendar year.

Failure to do that has rather severe financial penalties.

RMDs are required for 2021.

Trying to time the market is foolish. It goes up and it goes down, up more often than down.

I have two Trusts, One OR and one CA. I am familiar with Trusts....trust me.

Yep.
Anyone with an appreciable amount of property, especially in more than one state, should consider using Trusts or make preparations for some possibly very costly estate probate issues.

That could well be true. All I was saying is that you are not required to take the 2019 RMD. This is from Vanguard and my CPA.

I pay my CPA very well to deliver me from severe financial penalties. And I trust Vanguard, been with them for decades.

Roth’s...no RMDs for Roth IRA’s during the account owner's lifetime.
I think they’re a good investment tool for working class people.

It would pay them dividends if some of the children around here would pay heed to us Old Farts.

Trusts do not limit or reduce taxes, they allow avoidance of probate which can be long, complicated and expensive, especially if big bucks are involved and beneficiaries get onery. Your heirs will still need to hire a trust attorney. Best if they use the attorney who crafted your trust.

Agreed about last year. There was never any argument about last year.

All references that I made concerned this calendar year.

Redux:
For those who feel that the market will fall in this 2021 calendar year AND with the market at a relative high point,,,some may want to consider taking their RMDS immediately while the market is high as opposed to waiting until later IF the market falls and causing a deeper hit to one’s nest egg.

That’s all.

Truer words were never spake.

That is why I like Total Market index funds.

Yessir and I’ve seen the scenario that you’ve described happen and it wasn’t pretty plus the legal fees were exorbitant.

Call it a Lawyer’s wet dream come true,,,all of which could have been avoided with a little judicious planning and minor expense relative to what expenses that can occur down the road.

Blah, Blah, Blah through several epistles. Ever been to Malvern on such business? Quite a few folks are "with" Vanguard - probably including quite a number at the Campfire. Here, we don't pay a CPA "well" - we dont't pay one even a penny. But, somehow we understand RMD's, tax avoidance strategies, gain on investments, etc. Is there something special and exemplary to be gained from your epistles?

Yes. If one has the education and intelligence to understand them.

I'm not sure you will benefit.

Well, your "Yes. If -" would seem to apply to almost any information source, if unique and relevant. Your uncertainty is justified - for I am not sure either. It becomes a challenge when dealing with solipsistic and bloviated aeriform.

Hilarious
SirSpanksAlot going mano y Mano with Old Tooter

LOL

CCCCCC---You are obviously not up to the challenge

You don't know obvious - you don't even know the person - so you speak as the bloviator who knows nothing about the challenge. More aeriform.

Non-responsive. Please address the topic in play.

Very responsive to the subject at play:
"You don't know obvious - you don't even know the person - so you speak as the bloviator who knows nothing about the challenge. More aeriform."
Done with this subject..

Non-responsive. Please address the topic in play. I am glad to hear you are "done" with this subject. Your off topic comments were not helpful.

Dear Mr. ____________:

Thank you for your note and I hope you are well.

You are correct that the CARES Act has waived the requirement to take the
required minimum distribution (RMD) for the year 2020. Vanguard has placed
the necessary alerts on all impacted accounts that "The CARES Act provides
a temporary waiver for 2020 so you do NOT have to take your RMD for 2020 if
you don't want to."

Please let us know if we can provide any further clarification or answer
any follow-up questions. Additionally, you can speak to one of our
knowledgeable representatives directly at 877-662-7447. Representatives are
available business days 8 a.m. to 8 p.m., Eastern time.

Best regards,

Anne Marie Scott

Just a reminder that this discussion concerns the current year, 2021.

There was never a question concerning year 2020.

Non-responsive. Please address the topic in play.

The string is titled RMD. What could be more on point? Perhaps your reading level is not up to understanding the post?

Just a reminder that this discussion concerns the current year, 2021.
There was never a question concerning year 2020.

I felt that my first post, in and of itself, was explanatory enough but perhaps and evidently it wasn’t.

Time for this thread to die.

Thanks to those who contributed.

The Tootster