TSP and IRA – 70 in June of 2018 – RMD Question
For a retired federal employee who turned 70 in June 2018 with both a Traditional IRA and a Thrift Savings Plan balance, what are her options to satisfy the RMD requirement, understanding that she will have until April 1 2019 for the first distribution. Assuming the balances are roughly $100k and $500k, respectively, is there anything creative that can be done assuming she wants to keep the funds invested instead of spending the money? Also, shell have to take the second distribution by 12/31/19, correct. Thanks.
Permalink Submitted by Alan - IRA critic on Sat, 2018-11-17 00:30
She should aim to equalize her taxable income between 2018 and 2019 in order to stay out of a higher bracket. To do that, there is the one time option for the 70.5 year to defer all or part of the 2018 RMD for either or both the IRA and TSP accounts. So if other taxable income is equal she can make her RMD income equal as well. However, deferring both the TSP and IRA 2018 RMDs into 2019 which would result in 4 RMDs due in 2019 could cause a higher rate. This is the exact time to crunch the numbers since she should know fairly close what her taxable income will be in 2018 with 0, partial, or full 2018 RMDs, and she may also be able to determine with less certainty what her 2019 taxable income will be. A QCD is also an option for the IRA RMD, but she must be 70.5 to the day before she can do a QCD from her IRA.