Usually, I’ve pulled it around mid-year. This year I’m thinking of waiting until after December 1. It’s a relatively small amount as I’m mostly in Roths. I’ve noticed “reminders” to take it by December 31 whenever I log in to Fidelity recently. The amount they display is correct since I don’t have any other Traditional IRAs. Can I assume I’m OK waiting until sometime in December? Any drawbacks to waiting (except that the markets may slide before then)? I don’t desire to have Fido become overly concerned.
Comments
Also … age has pushed me towards a pretty conservative portfolio. So, big market moves don’t affect it as much today as say 5 or 10 years ago. Mainly, I just don’t want Fido to throw a “Hissy Fit” thinking I’ve forgotten.
We pull RMD's in early December. As Fido has an excellent step by step as to 'what do you want to do with the withdrawal'. We always choose 90% to the IRS for the FED side and the remainder to the Michigan taxes side. Our RMD's have become large enough to affect our taxes due.
OH NO !!! A high enough tax bracket for sure, but not that.
As noted by @Old_Joe, we use all of the RMD's (both of our IRA's) and rather than place the money back into Fido investments or transfer to our CU acct.; we direct Fido (a few simple entries) to direct the money(s) towards FED and state taxes; and a type of 'estimated' tax payment in December. We generally have a good idea of what our tax obligation will be and this usually satisfies this without having to be concerned with 'underpayment'. Worse case would be to make a true estimated payment to the FED and state via their online program.
FWIW - ”Generally, most taxpayers will avoid this penalty if they either owe less than $1,000 in tax after subtracting their withholding and refundable credits, or if they paid withholding and estimated tax of at least 90% of the tax for the current year or 100% of the tax shown on the return for the prior year, whichever is smaller.”
Source / IRS
I first heard of this about 20 years ago. And it has worked over the years for me without problems. I’d prefer to owe the IRS some money in April rather than wait for a refund. Note: Not intended as tax advice.
From your link:
" April 1 of the year following the later of the year you turn 72 (70 ½ if you reach 70 ½ before January 1, 2020) or the year you retire (if allowed by your plan). If you are a 5% owner, you must start RMDs by April 1 of the year following the year you turn 72 (70 ½ if you reach 70 ½ before January 1, 2020)."
https://www.irs.gov/retirement-plans/rmd-comparison-chart-iras-vs-defined-contribution-plans
The "FAQS" page has the correct information
"(73 if you reach age 72 after Dec. 31, 2022). "
Does anyone have experiences on Schwab of Fidelity's with holding policies? Can you have most or all of RMD withheld for taxes?
I just checked with TSP. They will only withhold a certain maximal % but won't tell me what it is
I did something like that at T Rowe once. Must have been to meet tax obligation after doing a Roth conversion elsewhere. ISTM it should be simple to do what you are requesting online at Fido. Just go slow and back-out before hitting send if doesn’t appear correct. I often specify “no taxes withheld” when pulling small sums from my traditional IRA at Fidelity.
Drifting here … but had an awful time with TRP regarding state tax withholding. Required me to mail in paperwork yearly to allow not withholding it. Then, they changed policy w/o informing me and just took the money regardless of any paperwork or phone calls I made. Gosh - just remembered another reason not to deal directly with TRP.