Permalink Submitted by tomd37 on Mon, 2020-04-06 16:10
It is my understanding that the RMD for each different category (i.e. IRA vs. 401k) must each be taken from their respective category and that you cannot combine either with the other category. It is also my understanding that distributions from like categories (i.e. IRA and 401k) can be combined and taken from one source within each of those categories. If inherited fund distributions are involved any required distributions must be taken individually from those funds and not considered with your regular IRA or 401k distributions. Maybe someone else can explain it in simpler terms.
Permalink Submitted by Alan - IRA critic on Mon, 2020-04-06 18:00
Tom is correct, except that the only plans that can aggregate RMDs between other plans of the same type are IRAs and 403b plans. For example, each 401k plan a taxpayer has must distribute it’s own RMD.
Permalink Submitted by jeffrey keith on Mon, 2020-04-06 18:14
If you have negative adjusted gross income for 2020 before your RMD from, for instance, rental depreciation, consider taking a withdrawal from your retirement account(s) up to the amount that will give you zero taxes owed. What ever that amount is will be effectively a tax free withdrawal from your retirement account for 2020. I use Turbo Tax so it’s easy to determine my adjusted gross before RMD, which would show a refund or no tax owed, and then fiddle with various retirement account withdrawal amounts until Turbo Tax shows zero tax owed. That will be the amount I withdraw tax free.
Permalink Submitted by Alan - IRA critic on Mon, 2020-04-06 18:27
If you do not need this money, you are better converting to a Roth tax free than just withdrawing the money and putting it in a taxable account. But some people may need to pad their emergency fund somewhat.
Permalink Submitted by tomd37 on Mon, 2020-04-06 16:10
It is my understanding that the RMD for each different category (i.e. IRA vs. 401k) must each be taken from their respective category and that you cannot combine either with the other category. It is also my understanding that distributions from like categories (i.e. IRA and 401k) can be combined and taken from one source within each of those categories. If inherited fund distributions are involved any required distributions must be taken individually from those funds and not considered with your regular IRA or 401k distributions. Maybe someone else can explain it in simpler terms.
Permalink Submitted by Alan - IRA critic on Mon, 2020-04-06 18:00
Tom is correct, except that the only plans that can aggregate RMDs between other plans of the same type are IRAs and 403b plans. For example, each 401k plan a taxpayer has must distribute it’s own RMD.
Permalink Submitted by jeffrey keith on Mon, 2020-04-06 18:14
If you have negative adjusted gross income for 2020 before your RMD from, for instance, rental depreciation, consider taking a withdrawal from your retirement account(s) up to the amount that will give you zero taxes owed. What ever that amount is will be effectively a tax free withdrawal from your retirement account for 2020. I use Turbo Tax so it’s easy to determine my adjusted gross before RMD, which would show a refund or no tax owed, and then fiddle with various retirement account withdrawal amounts until Turbo Tax shows zero tax owed. That will be the amount I withdraw tax free.
Permalink Submitted by Alan - IRA critic on Mon, 2020-04-06 18:27
If you do not need this money, you are better converting to a Roth tax free than just withdrawing the money and putting it in a taxable account. But some people may need to pad their emergency fund somewhat.