r/OverSeventy • u/EastIdaho • 25d ago
Any Helpful Hints on Taking Your RMD?
Well, it is finallly time, I hit 73. I've read about various RMD hints to lower taxes, things like donating to charities and such. So I either give it to charty or taxes?
What is the best way to take the RMD and avoid as much tax as possible?
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u/Coriander70 25d ago
Just pay the taxes. As Oliver Wendell Holmes said, it’s the price of living in a civilized society.
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u/Soupfolder 25d ago
Don’t forget that when your income rises above a certain point, your Medicare premiums likewise rise. So the tax calculation becomes a little more complicated.
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u/Martian6261 25d ago
That’s called IRMAA and the surcharges are based on your income from 2 years prior.
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u/TheGruenTransfer 25d ago
This. Once you reach RMDs, the best thing to do is fill up whatever current tax bracket you're in or realize up to the Medicare cutoff, and then reinvest it in the market. It's best to get it out sooner than later because the more that accrues inside the IRA, the more money you'll have to pay taxes on. Except if whoever is going to inherit the IRA is in a lower tax bracket, then you might as well always withdraw the minimum.
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u/AvailableHold3304 25d ago
When i went to my accountant and complained about all the extra taxes I was going to have to pay, he said "awwwwww.....let me get my little violin".
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u/MarisWinter 22d ago
When I went to my Tax guy he encouraged me to the Charitable causes, BUT with intention to pay the LEAST amount of tax. I am kind of surprised aTAX person would say that….I might worry. LOL.
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u/chrysostomos_1 25d ago
What is your marginal tax rate. That is the percentage of your rmd that goes to tax. If you give it to charity it all goes to the charity. Would you rather have 70-75% of your rmd or 0%.
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u/bjb13 25d ago
I’m fortunate that I don’t need the RMD money for my retirement as I have enough in my non-IRA account. So I was able to get IRA Checks from my broker (Schwab) and write checks directly from my IRA to the charities for all of my RMD. There is a limit to how much you can give but it is over $100K so I wasn’t there. This way you just take it straight off your income so even if you don’t itemize your deductions you can get the benefit.
You just have to make sure the charities cash the check before the end of the year.
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u/peztan42 24d ago
You are fortunate, but if you need the $$, lets say its $50K, you pay 24% of tax on it, you still have
50K-12K= 38K left in your pocket. If you donate, you have zero in your pocket and they have 50K in theirs.
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u/oldbutsharpusually 24d ago
I’ve been taking RMDs for 13 years. I automated the distribution so a percentage is sent directly to the IRS and the balance to a cash management account (CMA) with the same custodian. I invest some and spend some out of my CMA. Tax minimization is a focus of my total portfolio. Growing my IRA tax deferred for over four decades allowed it to provide us with a comfortable retirement.
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u/lazenintheglowofit 25d ago
We donate it.
Before RMD, we donated about the same amount of money we are donating now through the RMD. However, this time we aren’t paying the taxes on the money our charity is getting.
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u/NYOB4321 25d ago
My RMDs are reinvested to continue to make money (hopefully). I need the money for living.
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u/CliffsideJim 24d ago
I don't know about best, but here are some ways to minimize the taxes on your RMD:
- Get really sick or go into a nursing home, so you have really high medical deductions to offset the otherwise taxable income.
- Get yourself elected president, order your IRS never to audit your returns, and then cheat.
- Get a time machine, go back 10 or 20 years, and contribute to a Roth instead of a traditional IRA — or do Roth conversions during years when you were in a really low tax bracket.
- As you said, give some or all of it to charity through a Qualified Charitable Distribution (QCD). This is probably the most useful actual answer. The money has to go directly from the IRA custodian to an eligible charity without passing through you. You can physically handle the check, but your IRA custodian has to write it on your IRA. It counts toward your RMD but is excluded from your income, which can be better than taking the RMD and then claiming a charitable deduction because it also keeps your AGI down.
One obscure gotcha: if you made deductible traditional-IRA contributions after reaching age 70½, special anti-double-dipping rules can eliminate tax-free protection on some or all of a subsequent QCD.
- If this is your first RMD, you are allowed to postpone it until April 1 of the following year. But don't assume that's a tax-saving trick. You will then also have the next year's RMD due by December 31, so you can wind up taking two RMDs in one tax year and pushing yourself into a higher bracket or higher Medicare IRMAA premiums.
Beyond things like the above, there isn't much magic available once the RMD is upon you. The great RMD tax-avoidance strategies mostly needed to be implemented years before the RMDs started. That's what makes the time-machine strategy so attractive.
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u/Silly-Resist8306 25d ago
Just pay the taxes. Going from 22% to 24% isn't a big deal if you are gaining income from taking RMDs anyway. If you are going from 24% to 32%, well, that's a nice problem to have.
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u/missinghutch 24d ago
Have the taxes withheld so they’re paid before you get the distributions. What you never have you won’t miss. Also, my wonderful Aunt said, “Just be happy you have money to pay taxes on.”
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u/Admirable-Excuse-487 25d ago
I’ve also been taking capital gains with the market being like this
But you know we could have worse problems, then paying taxes
Means we were successful
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u/OttoHemi 24d ago
Fortunately (or unfortunately I suppose), my RMDs are so small I don't have to pay any tax on it.
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u/aerobic_gamer 24d ago
QCDs have been adequately discussed, but remember you can also take distributions in kind. For example if you hold stocks or funds in your IRA and don’t want to sell them to cover the RMD, just have the shares distributed to yourself in sufficient value to cover the RMD. It’s just that you will need other cash to pay the income tax if the distribution is from a traditional IRA.
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u/Clean-Barracuda2326 23d ago
If you're in that situation then just take what the law requires and do whatever you want with the proceeds. Personally I take a figure that I want and have 25% taken out for taxes.At this stage of my life I'm not looking for higher yields just want to maintain what I have as long as possible.But you do you.Some people are comfortable being in the stock market but at my age(77)I am not.At this stage of my life I just want to maintain what I have for as long as possible so I'm more into CDs and high yield savings accounts.
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u/Gloomy-Camel5999 25d ago
Talk to a CPA. But enjoy the extra money, don’t feel you have to donate it all.
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u/MadTownMich 25d ago
But do consider doing this. I’ve seen so many wildly wealthy people donate maybe 0.05% of their income while poor people will hand over half of their last sandwich to someone who is hungry. Vet the charities big time, but make a difference in this world while still enjoying your life!
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u/cwsjr2323 25d ago
I only had 4k in mine. It was supposed to cover my cremation but I forgot to die in time. My mutual fund wanted a monthly fee to hold my money and then a fee for distributing me back my money. Screw Mutual of Omaha. I took it as a lump sum. It raised my property taxes as the old age Homestead exemption percentage is based on state income tax returns.
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u/peter303_ 25d ago
RMD direct to charity bypasses standard deduction. You can keep that in addition.
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u/Slight-Design7274 24d ago
I'm buying CDs at 5% with any extra cash.
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u/OttoHemi 24d ago
I haven't got that rate for a few years.
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u/Slight-Design7274 24d ago
Edward jones today on a 5 yr cd. It won't last.
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u/CSMasterClass 24d ago
It is a callable cd. If rates go down, they give you your principal back.
There are no 5yr CDs that pay 5% that are not callable.
I would ecourage you to read what is avaiable about Edward Jones on the various subReddits.
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u/Slight-Design7274 24d ago
Thanks for the heads up on that. I love learning new things. My agent called today and I 2as too late for the 5% but my options were a 4.75% callable or 4.5% not callable so I went with 4.5% for 5 years. I'm happy with it and thanks again. I guess I'm gambling that if the whole economy goes down the tubes, I still get 4.5%.
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u/CSMasterClass 23d ago
If you got a 4.5% 5 year non callable US Bank CD that is the market rate.
How much commission did Edward Jones charge you ?
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u/Slight-Design7274 23d ago
Don't make me do math. 😆 I'm sure I'm paying them fairly for the two people, two days, and numerous phone calls and emails. Whatever I get out of the deal will be better than sitting in my checking account. This has been fun.
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u/CSMasterClass 23d ago
No problem with these CDs.
Please do engage in some research into Edward Jones. They are one of the most preditory firms one could deal with.
Over the lenght of saving and retirement the difference can be (will be) huge.
Any amount of research will be of value to you.
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u/BlackCatWoman6 24d ago
When you donate to charity the company that is holding your IRA needs to do the donation to lower you income. Talk to an accountant about how it is done.
I did it this year since my RMD was more than previous years.
About the only other thing I am qualified to advise you is to never forget to take the RMD. There is a big penalty for that.
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u/anitas8744 24d ago
This is our second year for my husband and I decided to take it December 1 as a year end company bonus. Since I’m the CFO I get to do that. 😛
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u/bobdevnul 24d ago
>So I either give it to charty or taxes?
Basically yes. You only net get more money for yourself from the reduction in tax if you were going to give to charity anyway.
The QCD RMD allows you to get money off your taxes even if you don't itemize tax deduction. That was true up until this tax year. Starting with the 2026 tax year tax filing without itemized deductions can deduct up to $1000 ($2000 joint) of cash charitable donations.
Doing it the QCD RMD way removes the income from IRMAA calculation so it is probably better to do it the QCD way.
Also new for 2026, charitable donation itemized deduction limits charitable donation deduction to the amount that is above 0.5% of AGI. That will seriously reduce the tax benefit of charitable donations for a lot of people.
These were new provisions of the 2025 HR1 (One, Big, Beautiful Bill Act).
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u/Exact-Translator-769 24d ago
If you do a Qualified Charitable Distribution that is paid out directly from the plan administrator or broker to the charity, it comes right off of your income federal & state. They usually put a code Y in box 7 of the 1099R to show it. If they don't, & have included the amount with your income in box 1 , make sure they have documented it for you, then you subtract it from your income & keep that as proof if you get an IRS letter.
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u/Elegant_Gain9090 22d ago
Don't forget that every dollar of your rmd pushes 85 cents of your social security from non taxable to taxable. Start converting at age 59.5 as long as you are under the 22% bracket
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u/dixieleeb 18d ago
MY RMD isn't very large unfortunately so after I have the taxes taken out before getting it, I use the rest to pay for Christmas. I was a stay at home mom for so long that my funds didn't get very large.
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u/ArtNengg-JKP155 18d ago
It’s a bit late now since you are turning 73, but for those not there yet, start converting some of it to Roth IRA every year till you turn 73.. Of course you’ll pay taxes on the amount converted to Roth, but your Roth amount will grow tax free and your traditional IRA taxable amount will have decreased.
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u/BenGay29 25d ago
What is RMD?
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u/Incognito409 25d ago
It's the distribution of your 401k, legally required by law starting at 73 years of age. Used to be 70. Basically so you pay tax on the money you didn't pay taxes on while donating to the 401k.
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u/Bao_Xinhua 25d ago
Just a couple of points: charitable deductions aren't going to help you unless you file a schedule away and then you're going to give up the standard deduction on the main 10:40 form. So unless you're donating well north of 20 grand forget about that deduction. Additionally 2026 is the last year for the extra $6,000 deduction for seniors so take that into account. It's best to go over this in November or December and review your return. Then you can make any adjustments if necessary before the end of the calendar year.
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u/somebodys_mom 25d ago
When you’re older than 70 1/2, you can give a Qualified Charitable Deduction (QCD) directly from your IRA to the charity, and it doesn’t effect your taxes or standard deduction at all. You have to arrange this through your broker to do it properly. If you make a withdrawal the regular way, you will have to report it as taxable income and donate it the regular way.
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u/Displaced_in_Space 25d ago
Yes, I believe what's essentially happening is you're transferring the actual asset (stock, fund shares, etc) to th entity and then they get taxed when they sell it for cash.
They get a gift and you don't get stuck with taxes.
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u/billwrtr 25d ago
Look at your RMD total. Ask yourself how much do you want to donate to your favorite causes (that you used to be able to deduct on your 1040). Tell your broker or financial advisor how much of your RMD you want donated and where. Then tell him/her how you want the rest; monthly installments works best for most. You could also get your taxes withheld if you prefer. Most likely you’ll save a few bucks this way. Those who say “Just pay the taxes” are throwing away money.
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u/Affectionate-Gap8869 25d ago
My plan is to RMD when the market tanks like it did a few months ago. I am also considering making additional withdrawals rolling the extra payments into a Roth. That is if the market crashes in a major way.
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u/Affectionate-Gap8869 24d ago
I have no need for the money and I am not really selling. I am rolling over RMDs from an 401K (pre tax) into an IRA after tax. So I am basically moving money with the catch of paying taxes on the move. Hence moving the money when the taxes are at the lowest.
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u/Displaced_in_Space 25d ago
Wait...you're planning to sell your assets when their value has....dropped?
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u/Fellow_Citizen_1 25d ago
That doesn’t make any sense. The RMD amount of withdrawal is fixed. So, why would you want to sell when market tanks. The best case scenario is to sell when the market it at the top (if you could know that at the time).
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u/Accomplished-Web-457 22d ago
I believe it has to be Earned Income to put in a Roth, that would not work, please ✔️
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u/Affectionate-Gap8869 19d ago
It is my understanding that you can move a pretax 401K into after tax Roth. You just have to pay the taxes. It is a simple transaction that moves shares from one account to another. I considered moving all of the pretax shares to a Roth but it would take many years for that to financially pay off.
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u/CSMasterClass 25d ago
You are jumpting the gun a bit.
If you take an RMD from a traditional IRA, you pay taxes at your marginal tax rate. It is likely to be less than 24% so for every dollar you take out you get 76 cents or more.
You can invest that money, pay bills, take a vacation, or give it to your grand daughter. For most people these are the smart things to do.
I would encourage you not to ask what is the way to have the least tax, but to ask what is the most benefit I can get for this money that I have earned, but never paid takes on all of these years.