Have You Suspened RMDs This Year?

BenWP

I have, after following a TIAA communication on this subject. I don't necessarily need the distributions to meet our living expenses (which have declined since sheltering started) and I do want to reduce our taxable income. TIAA spells out a complicated (to my mind) way of returning the Jan-April RMDs, along with the taxes withheld, as a way to further reduce taxable income. I have to pay closer attention to checking account balance now that there are no monthly deposits. I'd like to know what other seniors are doing with their RMDs.

catch22

If one doesn't have a need for a RMD for current needs; I've suggested to those I know that the RMD shouldn't be taken until just prior to the calendar year end (the old RMD rule). Let the money grow through the entire year. Yes, you're going to be taxed or way or another.
Can't help you with the suspend circumstance; except that you've stopped the distribution and likely not to be worth the paperwork effort to recover 4 months worth of distribution/taxation.

hank

Sorta. Won’t need as much as normally pull out due to not being able to travel anywhere this summer (and who knows for how long?) - plus being gifted a $1200 check from Uncle Donald. Will pull partial RMD however to meet budget needs. And it’s always nice to leave the Roth untouched in any given year. I always move the anticipated budget needs into TRBUX (ultra short) far in advance and leave it under the tax-sheltered umbrella until actually needed. Made deferring some of the anticipated RMD super easy in this case. Good suggestion from @BenWP for those who might need to reclaim their RMD.

catch22 said:

“... Let the money grow through the entire year.”

Catch did qualify that comment with “If one doesn't have a need for a RMD for current needs”. Otherwise I’d caution against leaving $$ you expect to need any time soon in the markets. They don’t always “grow”.

A thought: Fortunate are those “average” retirees who can subside beyond age 70.5 without having to tap even a small portion of their tax-sheltered investments. Having substantial non-deferred savings would be one reason not to need to rely on tax-deferred accounts. I searched for the % of Americans in retirement who subside w/o tapping tax-deferred assets, but couldn’t find an answer. Putting aside the substantial number who have no tax-shelter at all, I’d guess the number to be perhaps 10-15% who have one but don’t rely on it to fund living expenses - at least to some degree.

BenWP

@hank: It's a high-class problem.

Anna

I cancelled the autopay on mine thinking I could always pay toward the end of the year if I changed my mind. I always bring it back to pretax level before I reinvest it in after tax investments. I guess I come out ahead without taking the RMD since this makeup tax can be put in the piggy bank along with all the other spare change and invested in an after tax investment. For now our pension and SS type cash flow is far more than we need.

msf

Fidelity has an interesting operational thought. If your RMDs are taken automatically, then don't turn them off. You'd just have to turn them on again next year. Instead, keep the automatic system enabled, but set the RMD amount for 2020 to $0.00.

I have an inherited Roth, so that's what I did with my account. (Inherited IRAs have RMDs regardless of age.)

Here's a column by Jeffrey Levine, CPA/PFS™ on Kitces' site that explains when you can move the money back into a T-IRA. If you can't (e.g. because you've already done one rollover this year), you can consider rolling the money over into a Roth instead of leaving it in a taxable account.
https://www.kitces.com/blog/2020-rmd-waived-cares-act-irs-notice-2020-23-fix-unwanted-rmd-rollover/

Level5

My wife suspended her RMD from TIAA starting in June. There was a notification that even though it was suspended for 2020, it would auto-start-up for 2021.

hank

BenWP said:

@hank: It's a high-class problem.

In that case than, from F. Scott Fitzgerald ...

“Let me tell you about the very rich. They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft where we are hard, and cynical where we are trustful, in a way that, unless you were born rich, it is very difficult to understand. They think, deep in their hearts, that they are better than we are because we had to discover the compensations and refuges of life for ourselves. Even when they enter deep into our world or sink below us, they still think that they are better than we are. They are different. ”

Thank you Ben for adding some lucidity here. I was beginning to suspect that you were a cut above my pedestrian level. However, it’s occurred to me that with near 70% of my meager IRA holdings inside a Roth, that’s one more reason I don’t worry too much about taking the required RMD on the remainder. Love the Roth - “Let me count the ways ... ”

BenWP

@hank: It’s likely that the rich don’t even worry about RMDs because their wealth is not tied up in tax-deferred accounts. I agree with @catch22 that doing the paperwork is not worth my time. I’ve been obliged to take distributions for about 8 years, lump-sum for a while, and monthly over the past 3 years. If I’d been taking mine at year end, I could have had more choice. Fully agree with the sentiment that just leaving the money to grow guarantees nothing.

Rbrt

Both spouse and I have inherited IRAs. I have stopped the RMD for mine. (Thanks for reminding me to make a note in her calendar).
I had intended to fund a HSA with that RMD. Now I plan to do that next year.

msf

It’s likely that the rich don’t even worry about RMDs because their wealth is not tied up in tax-deferred accounts

Well, some of the well to do. Then there are others ...

Romney’s personal financial summary, disclosed last August under federal election rules, shows that his IRA holds his most lucrative investments, which are stakes in partnerships run by Bain Capital. ...

Romney’s IRA produced income of $1.5 million to $8.5 million over 2010 and through August 12, 2011, according to his financial summary.

https://www.reuters.com/article/us-usa-campaign-romney-ira/how-did-romneys-ira-grow-so-big-idUSTRE80N04E20120124

BenWP

I was thinking about Romney as I wrote that, @msf. A few years after this IRA was news, another wealthy candidate complained that the system was rigged, although he probably didn’t know at the time that the Electoral College was the fix. I have lowly mutual funds in my Roth and I do not have an elevator for my cars, as Romney’s house in SoCal apparently does.