Since we are required to take a percentage of our 401 K because we are 73 . So should we take that money 40000 or so with taxes taken out or not what’s the pros and cons of that thanks in advance
Tax question
- Thread starter jav
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GypsmJim
GypsmJim
You owe taxes....period. If you deduct it from the disbursal, it is a tax payment and the bank does it for you. If you wait until you do your taxes, you write them a check and its a tax payment.
It all depends on how much you owe. If its big bucks and you wait till April, you will also pay a penalty.
It all depends on how much you owe. If its big bucks and you wait till April, you will also pay a penalty.
Are you asking to take out ALL your funds in your 401k or just the required minimum distribution?
I’m not 73, but my mom is 80 something and she has to do this each year. She takes out the RMD and then has it directly go into another account. They use Schwab.
I wouldn’t take out more than what’s required unless you need to, simply because you will have to pay more taxes.
I’m not 73, but my mom is 80 something and she has to do this each year. She takes out the RMD and then has it directly go into another account. They use Schwab.
I wouldn’t take out more than what’s required unless you need to, simply because you will have to pay more taxes.
OP
Just RMD
Yaworski
Hawkeye
I would recommend talking to a tax accountant.
I most heartily believe in SIMPLICITY......... I make sure that I have all the taxes taken out of all distributions (of all kinds) before I get the money; I simply refer to it as 'withholding'. I'm ONLY concerned with NOT having to pay the IRS ever; I often don't even take back any "over payment", but rather let my Uncle Sam keep it and put it towards next year's "tax due". He can waste as he sees fit. I understand that is "financially stupid"; I'm OK with that.
The advice above re: talking to a tax accountant is the best advice you can get. My guy also thinks my simplicity is stupid.
J.
The advice above re: talking to a tax accountant is the best advice you can get. My guy also thinks my simplicity is stupid.
J.
I second this. At least once, to get on the right path. If any of your 401K distribution was from a Roth, you wouldn’t owe tax on that. (My 401 is part Roth, and part regular)
Lt92
Single-Sixer
Does the RMD kick in on your 73rd bd or January first of your 73rd year?
It's all here.... lots of FAQs too:
https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs
J.
Another reason to let your CPA or attorney interpret all that …… so many rules, laws, different applications for different folks of different ages and income levels ……
Lt92
Single-Sixer
Thanks...if I read it correctly, I must take my first RMD before April 1st
And if you don’t there will surely be a penalty.
The internet is not the best place for such advice …. Just sayin’.
Regardless, best of luck to you with whatever you decide.
GypsmJim
GypsmJim
And if you do screw up the penalty will be a lot less than the Tax Attorney's fee.
The above link tells all. Just read it. I have been using Turbotax for about 25 years now and if you go thru it step by step it will take care of you.
You are already behind the eight ball. (if this is you skip to the end)
The time to start taking money out of IRA's, 401k's is long before you hit the age for RMD's. Once you hit RMD age you are at the mercy of the government.
If you start early you can take just enough above whatever other income you have to the top of your chosen tax rate and needs.
I currently take out as much to top out the 22% bracket. More than I need, so I reinvest the excess. But now it is out of government control.
I am set up so by the time I hit RMD age my withdrawal will be approximately what my need will be so no forced excess withdrawal and taxes.
Get a financial advisor involved. A FIDUCIARY, they don't sell you crap, just help you navigate the realm of finances and taxes.
The time to start taking money out of IRA's, 401k's is long before you hit the age for RMD's. Once you hit RMD age you are at the mercy of the government.
If you start early you can take just enough above whatever other income you have to the top of your chosen tax rate and needs.
I currently take out as much to top out the 22% bracket. More than I need, so I reinvest the excess. But now it is out of government control.
I am set up so by the time I hit RMD age my withdrawal will be approximately what my need will be so no forced excess withdrawal and taxes.
Get a financial advisor involved. A FIDUCIARY, they don't sell you crap, just help you navigate the realm of finances and taxes.
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OP
I think you have the whole year to take the drawl.
OP
Yes I understand that but I like to here others opinions that’s all
OP
This is what I plan to do take my 20000 now which I do every year let them take taxes out of that it’s my gun money fund . Since we don’t need the money the rest of the RMD can wait till the end of the year and will take and reinvest
You mean you don't get important Financial, Medical, or Legal advice from random people on some internet forum???
Thr RMD is calculated at the beginning of the year, and you have the whole year to take it. If you don’t take it by December 31 penalties come into play.
4896worker
Single-Sixer
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- May 3, 2017
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A quick google search says the penalty is between 10 and 25 % . Don’t think a tax attorney or accountant would charge that much .
GasGuzzler
Hawkeye
No way am I asking a tax question on an internet forum nor would I answer someone's on an internet forum. Takes all kinds I guess.
GypsmJim
GypsmJim
I guess it depends on how much the RMD is.
When I started my business I had an accountant do my paperwork the first year. After I got the bill I said not this any more. I set up my own spreadsheets and bought a cheap Turbotax program and I was off and running.
JackBull
Hunter
Funny this question came up, I recently was assigned a new Ameriprise "agent", several months ago during my "initial interview with the new guy" I inquired about the RMD which had been 'suspended" during COVID 19 panic. Crickets, "we'll take care of this at the end of the year". December 31, mid-day I received a panicked call from an Ameriprise employee requesting I make a "telephonic" authorization to pay me the required RMD before midnight. I was kind of shocked by the amount, I think during the "suspension" the amount accrued over the last 4 years.
I'm not yet old enough to need to worry about RMD but my eldest sister is. She sent a Happy New Year email yesterday and mentioned that she would have to call Vanguard today to confirm her RMD amount and to set up regular withdrawals/payments to spread it out across the year. They must charge a fee per transaction because instead of doing it monthly, she said she has it paid quarterly.
Not true if you have decent size IRA/401. Planning now can save you money.
Oh, I've been making withdrawals to fill out my tax bracket ever since I retired, but what I meant was that I'm not old enough to have to take a required distribution. I have spreadsheets for various aspects of retirement planning and one of them has RMD stuff, but it is old and hasn't been updated since they bumped the age to 73. When I made that, I wasn't prescient enough to consider that the age might change before I get there, so it is hardcoded to start in January of the year I turn 70.5 (the pre-2019 bogie). The IRS bumped it to 72 in 2019 and 73 in 2023, but I might still be chasing it after that since it goes to 75 in 2033. I haven't studied the timing enough yet to comprehend whether 73 or 75 will apply to me. I think I may get to slide it out to 75 but 73 will apply to my wife who is 8 months older than me. She has a 457B to worry about, but the same rules apply.
