The best explanation I ever heard. I wish I knew this channel before. So far every financial advisor I had wanted to line their own pockets first. Thanks.
This was helpful. I was planning Roth Conversions but then I inherited an IRA and had to replan the next 10 years to deplete the inherited IRA to minimize taxes. Needs less to say, I plan to deplete 75% of it in the next 3 years while taxes tables are more favorable based on my projected income.
Studying for my SIE, Series 7 top off etc. and I wanted to tell you this is some pretty great content. You framed this concentration very well and learned a great deal. Thanks!
Thanks for providing important information. I found it very helpful. I would like to suggest that you write inserted texts in small letters. Capital letter texts are hard to read. Research has shown that all capital letters have a readability issue for many people. Thanks for your consideration.
Thank you very thorough. But one aspect of RMD that didn't get covered was how to aggregate the RMD requirement from one account rather than take an RMD from every individual account. My question: can Roth IRA(s) be aggregated with Traditional IRA(s) and make a single distribution from a Roth IRA? I assume not, since that would seem to skirt the IRS intent to reclaim taxes on the original contributions to the Traditional IRA(s). But I haven't found that question specifically addressed. Thank you.
Thank you very much. It’s a very good explanation. This is funny we work hard throughout our lives now that we’re retired we have to think how we gonna spend our money because IRS wants us to withdraw more. 💰😂
Very helpful. Who knew that saving money would be so costly? I gave most of my distribution to charities since Covid eliminated much of the travel on which we used to spend the money. They need the help, and the government doesn't get the money.... win,win!
Thanks so much for sharing your knowledge! The video is loaded with useful information. I just learned about things that apply to my situation watching your video. Just subscribed.
Great information! Also might add the option to disclaim a portion of an inherited IRA and designate your heirs to receive a portion of it (presuming you don't need it all)! Must be done within 9 months and the IRA must be intact and not touched or moved yet as well I believe!
Echo the gratitude others expressed. Can’t believe so few views on such an anxiety charged issue. I must assume the rest of the entire world has a financial planner and is in Mexico sipping margaritas with all their ducks in order
I queried a few of my friends who I thought might have started RMDs early, and while they're not in Mexico sipping margaritas, a surprising number of them do have their own financial planners.
Beneficiary alert: If you inherit an IRA, DO NOT take immediate possession of it (and maybe put it in a bank or brokerage account.) If you do, you'll have to pay the entire income tax on the entire IRA all at once. Instead, you want your custodian (ie. bank, brokerage, etc.) to TRANSFER the entire beneficiary IRA to you in your name. This way you put yourself in a position to follow the rules covered in this video.
Great video, thank you. The IRS websites are overwhealming with info., and calling them is a waste of time... on hold forever. Please help me with these 2 questions. 1. You said that Roth IRA is the same as the traditional, must pay IRS taxes AND income taxes on 1040, right? 2. I turned 72 this year, am a first timer. Is it OK to take out more than the required minimum, let's say an extra 10K... am really broke after Christmas and all this COVID affair. Thank you again. Happy New Year. Keep us posted, you are a wonderful communicator, a real gift for us...
Thanks Mari! 1. You do not pay any taxes on Roth IRA withdrawals. I think you may be referring to the portion of the video that talks about RMDs from inherited accounts? If so then you have to take required distributions from inherited Roth IRAs, but they aren’t taxable. 2. Yes, you may take more than the required amount. The required amount is just the minimum you must take.
Where do I find that RMD Table you showed us in your video, please ?? I assume it was an IRS Table, but I do not know how to get one. Please advise.. Thank you for this wonderful video ! I have learned so much that I needed to know ! Fran Danco
This was very informative. I am about to turn 71 and have been thinking of starting distributions in 2022, so a year earlier than I'm required to. The IRS website is a little confusing. Thanks for the clarity! Great presentation.
Very direct and clear presentation. Does an IRA inherited before the year 2020 use the same RMD table as for a Traditional IRA. You implied it might be different based on the decedents age.
It is a different table since the decedent’s age is also considered in the calculation. Thankfully there are a lot of online calculators that will do the calculation for you if you plug in the required info.
Please tell me why i should have a 401k. Remember all those years of getting tax breaks for contributing to your retirement? That's all deferred taxes. Now is the time pay. All these IRS rules is why don't have one. I have a stock portfolio of dividend paying stocks. It puts me in the 10-15% tax bracket.
The standard deduction and lower tax brackets is why If I invested in individual stocks in a non retirement account I would have to pay 22% tax up front. By investing in a retirement account my estimated tax liability will be 8.7% from 64 to 70 And After 70 when I start collecting Social Security my estimated tax liability will be 6.2% So instead of paying 22% to get the money to invest I paid nothing until years later and much compounding and then I paid less than 10% Then we could start to discuss my Roth retirement account which I'll pay no tax for the rest of my life
I would assume that these RMD is taxed as ordinary income. The Uniform Life Expectancy Life Tables- Can I use the tables in the General Method publication of the IRS? 15:22 How do you let the IRS know you are disabled? 12:19 Can you gift your IRA once taken out to a Charitable trust in Remainder and still get income and a Charitable deduction?
Taking my rmd over the years, I've squeezed the money market funds to just about zero. From which funds should I draw from now? Those with smallest share values?
Excellent explaining of RMD. Is married filing separately viewed by IRS as single when comes to RMD? Is it correct that all taxable income social security, IRA, and individual taxable account COMBINED calculated against expected life expectancy? Appreciate it much.
Great info 👍 I have an Ira & my wife has one we're both going to be 72 next year do we take RMD percentage out of both separately or from the total amount combined, Thanks
My wife bought an annuity almost 35 years ago using money from a divorce settlement. Sure wish the company had explained RMD's way back then! We'd be ready now. She will turn 72 this year!! I think this is gonna be a sucky year for taxes.
Thank you; very well done. Question 1: I am married and 18 years older than my wife and file a joint return. In terms of the age used in the calculation of my RMD does my wife lower age affect the number of years used in the calculation? How do I find that out? Question 2: I made after tax contributions to my IRA over the years. I presume I do not have to pay tax on that amount. How is that taken into account? Again, thanks and I look forward to other of your videos.
Thanks for the video, some good info. Question, my wife is older and already taking the RMD from her retirement account. I'm not 72 yet. If she passes away do I have to keep taking the RMD or can I stop it until I'm 72?
I have investment accounts with two different firms for my IRA's. After I calculate my RMD for the total of the two accounts, can I take the entire RMD amount from one of the accounts or must I take the appropriate amount from each account?
So if your birthday is later (at end of the year) you must use your age that you will be at the end of the year for the calculation ? Not your present age?
Great information, thank you. I'm 71 now and it seems that I need to take out my 1st RMD in 2022. When you say the amount is based on last year, do you mean 2020 tax year reported in 2021 on my 1040 or on my 2021 tax filing?
R.M.D.s as currently structured, are absolutely LUDICROUS. They should apply only to VERY high-income retirees, those who have income from other sources (S.S, pensions, annuities, etc) which exceed 2X the U.S. median household income, adjusted annually for inflation. Then..people of average means, wouldn't have to contend with all of these ABSURD retirement income planning "gymnastics", such as Roth-conversions, etc.
What about inherited ira’s? The passing of last year’s secure act says I have to liquidate the inherited Ira within 10 years. What is the most tax advantage way of doing this??
My RMD distribution is taxed and I don’t need the money! Sure I can put it in my brokerage account but it just generates more taxable income! Double taxation! What do you think of putting the money into life insurance and if I understand that you can take cash values out tax free.
How is it double taxation? You're only paying capital gains on the actual gained income. You're not paying taxes again on the basis. So you would rather pay an insurance company to take your money than pay 15%-20% on any profits made in a brokerage account?
In your listing of accounts that need a minimum distribution, you left out 403(b) accounts (which is what I have). I hope you didn't leave out any other kinds of accounts.
This video is excellent! Thanks for the useful information and effective presentation. Question: Do the new 2020 rules apply to everyone or only non spousal inheritance? I'm a little unclear on it and would appreciate some clarification. Thank you.
Thank you! They do not apply for spousal inheritances. If you inherit an IRA from a spouse you could still just turn that into your own IRA as beneficiary.
Thank you. The presentation confirmed many things that I had to dig for. Two questions. I have two RMDs to deal with. An inherited IRA which I received Oct '20 and took a distribution Dec '20 and will be taking another Dec '21. I also have a traditional IRA which requires the first RMD by 04-01-22. I am retired and receive income from a pension and SS but have no earned income. 1. Does that exclude me from adding to a Roth IRA? I would love to use the RMDs to fund a Roth IRA as I don't need the funds. 2. (this question depends on the answer to #1 and is moot if I cannot convert to a Roth IRA.) For the 2022 RMD from the traditional IRA be made before 01-01-22? If there is an option to convert to a Roth IRA, the second RMD in December would be blocked by the 365 day rule. The RMDs combined may push me up a bracket, but I understand marginal taxes, so just a bit more for the excess. There also capital gains that are at play with the market and selling a rental property.
Hi Gary, To be eligible for a Roth IRA contribution you have to have earned income, so pension/SS wouldn’t count. You can convert funds from your IRA to a Roth IRA, but the RMD amount can’t be converted. Only amounts above it could be.
My brother died intestate in 2019 with a 401k. He was 61 and named my Mom as the beneficiary. Mom died at age 91 in 2020 . 401k in 2021 was transferred to Mom's estate. Does the estate need to make RMDs? How much and for what years?
Yes, as long as you are at least 70.5 you can do a qualified charitable distribution direct from your IRA to the church/charity and it won't be included in your taxable income.
Any previous distributions prior to age 72 do not count or benefit as to RMD's? At age 62 I elected to take small monthly distributions and not apply for Social Security. My plan is to wait till or closer to full retirement age 66 10 months, then turn off distributions until required at age 72.
Previous distributions prior to age 72 don’t count towards your RMD. Previous distributions would lower your total account balance which would make your RMD lower than it otherwise would have been, but those distributions prior to 72 don’t count toward your required distribution.
How about converting Traditional IRA into Roth IRA during this period age 65 through 72 when the income is only Social Security & some investment income. ( Keeping the conversion amount within the 12% bracket )? Thus the inherited Roth IRA for the sons will still grow for next 10 years ! HARI HARI 🙏
There are different IRS tables for singles and married and married with age difference more than 10 yrs. I am 66.5 my wife is 10.5 yrs younger. Singles table gives about 19 yrs, married table gives 30 yrs. I think you should have mentioned it in your overview.
I believe there are new rules or a new interpretation on the part of the IRS in regard to inherited IRAs (and the 10 year rule) since this video was made. Maybe you can comment on this.
You don’t have to take an RMD from your 401k if you’re still working at the company that sponsors the 401k and you don’t own 5% of the company. You do have to take RMDs from IRAs though even if you’re still working.
The best explanation I ever heard. I wish I knew this channel before. So far every financial advisor I had wanted to line their own pockets first. Thanks.
Glad it was helpful!
I am going to share this video. I turn 72 in 2022, perfect timing. Excellent!
Thank you!
Love this channel. Easily understood and excellent information!
This was helpful. I was planning Roth Conversions but then I inherited an IRA and had to replan the next 10 years to deplete the inherited IRA to minimize taxes. Needs less to say, I plan to deplete 75% of it in the next 3 years while taxes tables are more favorable based on my projected income.
Studying for my SIE, Series 7 top off etc. and I wanted to tell you this is some pretty great content. You framed this concentration very well and learned a great deal. Thanks!
Great! Clearly explained how the RMD works, it helped me to learn what % I will need to withdraw for RMD. Thanks
Great explanation. Very timely for me to review with my financial advisor.
Thank you so much for this video. I need this info so much and have no one to consult. Bless you.
I'm glad to hear that, George!
Thanks for providing important information. I found it very helpful. I would like to suggest that you write inserted texts in small letters. Capital letter texts are hard to read. Research has shown that all capital letters have a readability issue for many people. Thanks for your consideration.
Very informative.clearly stated.
Glad it was helpful!
Well spoken instruction!
Thanks, John!
Thank you very thorough. But one aspect of RMD that didn't get covered was how to aggregate the RMD requirement from one account rather than take an RMD from every individual account. My question: can Roth IRA(s) be aggregated with Traditional IRA(s) and make a single distribution from a Roth IRA? I assume not, since that would seem to skirt the IRS intent to reclaim taxes on the original contributions to the Traditional IRA(s). But I haven't found that question specifically addressed. Thank you.
Enjoy your channel so much , and give me all the information so that I can plan ahead. thank you 🙏
Very good explanation.
Thank you very much. It’s a very good explanation. This is funny we work hard throughout our lives now that we’re retired we have to think how we gonna spend our money because IRS wants us to withdraw more. 💰😂
You’re welcome!
Very helpful. Who knew that saving money would be so costly? I gave most of my distribution to charities since Covid eliminated much of the travel on which we used to spend the money. They need the help, and the government doesn't get the money.... win,win!
Very informative video! Thank you!
You’re welcome!
Thanks so much for sharing your knowledge! The video is loaded with useful information. I just learned about things that apply to my situation watching your video. Just subscribed.
Thanks Jennifer! Glad to have you as a subscriber :)
Great information! Also might add the option to disclaim a portion of an inherited IRA and designate your heirs to receive a portion of it (presuming you don't need it all)! Must be done within 9 months and the IRA must be intact and not touched or moved yet as well I believe!
Thanks Elaine!
Echo the gratitude others expressed. Can’t believe so few views on such an anxiety charged issue. I must assume the rest of the entire world has a financial planner and is in Mexico sipping margaritas with all their ducks in order
Thanks Don!
I queried a few of my friends who I thought might have started RMDs early, and while they're not in Mexico sipping margaritas, a surprising number of them do have their own financial planners.
Ditto earlier comments on your clear and informative explanation. Thank you very much for taking time to educate the unwashed masses...
You’re welcome!
Beneficiary alert: If you inherit an IRA, DO NOT take immediate possession of it (and maybe put it in a bank or brokerage account.) If you do, you'll have to pay the entire income tax on the entire IRA all at once. Instead, you want your custodian (ie. bank, brokerage, etc.) to TRANSFER the entire beneficiary IRA to you in your name. This way you put yourself in a position to follow the rules covered in this video.
Thank you James, for another great video!
Complicated, confusing subject explained clearly.
Thank you!
Great video, thank you. The IRS websites are overwhealming with info., and calling them is a waste of time... on hold forever. Please help me with these 2 questions. 1. You said that Roth IRA is the same as the traditional, must pay IRS taxes AND income taxes on 1040, right? 2. I turned 72 this year, am a first timer. Is it OK to take out more than the required minimum, let's say an extra 10K... am really broke after Christmas and all this COVID affair. Thank you again. Happy New Year. Keep us posted, you are a wonderful communicator, a real gift for us...
Thanks Mari! 1. You do not pay any taxes on Roth IRA withdrawals. I think you may be referring to the portion of the video that talks about RMDs from inherited accounts? If so then you have to take required distributions from inherited Roth IRAs, but they aren’t taxable. 2. Yes, you may take more than the required amount. The required amount is just the minimum you must take.
@@RootFP You are GOLDEN! Thank you. Happy New Year! Hugs, M
Where do I find that RMD Table you showed us in your video, please ?? I assume it was an IRS Table, but I do not know how to get one.
Please advise.. Thank you for this wonderful video ! I have learned so much that I needed to know !
Fran Danco
Google ( Google images)
This was very informative. I am about to turn 71 and have been thinking of starting distributions in 2022, so a year earlier than I'm required to. The IRS website is a little confusing. Thanks for the clarity! Great presentation.
You’re welcome! Thanks for watching.
Very direct and clear presentation. Does an IRA inherited before the year 2020 use the same RMD table as for a Traditional IRA. You implied it might be different based on the decedents age.
It is a different table since the decedent’s age is also considered in the calculation. Thankfully there are a lot of online calculators that will do the calculation for you if you plug in the required info.
Please tell me why i should have a 401k. Remember all those years of getting tax breaks for contributing to your retirement? That's all deferred taxes. Now is the time pay. All these IRS rules is why don't have one. I have a stock portfolio of dividend paying stocks. It puts me in the 10-15% tax bracket.
The standard deduction and lower tax brackets is why
If I invested in individual stocks in a non retirement account I would have to pay 22% tax up front.
By investing in a retirement account my estimated tax liability will be 8.7% from 64 to 70
And
After 70 when I start collecting Social Security my estimated tax liability will be 6.2%
So instead of paying 22% to get the money to invest I paid nothing until years later and much compounding and then I paid less than 10%
Then we could start to discuss my Roth retirement account which I'll pay no tax for the rest of my life
I would assume that these RMD is taxed as ordinary income. The Uniform Life Expectancy Life Tables- Can I use the tables in the General Method publication of the IRS? 15:22 How do you let the IRS know you are disabled? 12:19 Can you gift your IRA once taken out to a Charitable trust in Remainder and still get income and a Charitable deduction?
Taking my rmd over the years, I've squeezed the money market funds to just about zero. From which funds should I draw from now? Those with smallest share values?
Excellent explaining of RMD. Is married filing separately viewed by IRS as single when comes to RMD? Is it correct that all taxable income social security, IRA, and individual taxable account COMBINED calculated against expected life expectancy? Appreciate it much.
The IRS doesn't take tax filing status into account when determining the RMD. It just has to do with your age and your account balance.
Great info 👍 I have an Ira & my wife has one we're both going to be 72 next year do we take RMD percentage out of both separately or from the total amount combined, Thanks
You would take them out separately.
When person born on 08/03/1955 must take the first RMD? Thanks
My wife bought an annuity almost 35 years ago using money from a divorce settlement. Sure wish the company had explained RMD's way back then! We'd be ready now. She will turn 72 this year!! I think this is gonna be a sucky year for taxes.
Financial planners will never run out of work for as long as IRS creates new creative rules that complicate things even further.
same for estate planning
Thank you; very well done. Question 1: I am married and 18 years older than my wife and file a joint return. In terms of the age used in the calculation of my RMD does my wife lower age affect the number of years used in the calculation? How do I find that out? Question 2: I made after tax contributions to my IRA over the years. I presume I do not have to pay tax on that amount. How is that taken into account? Again, thanks and I look forward to other of your videos.
RMD are based Solely on your age only . After tax contribution were to Roth IRA not standard . IRS website has info plus your plan can explain.
@@flowrob6861 There is a different table for persons with a spouse who is more than ten years younger, which will generally result in a lower RMD.
See my reply to Flow Rob
Very educational
Thank you
Thanks for the video, some good info. Question, my wife is older and already taking the RMD from her retirement account. I'm not 72 yet. If she passes away do I have to keep taking the RMD or can I stop it until I'm 72?
You could rollover her IRA into your IRA and not have to take RMDs until you turn 72.
Is there a best strategy of when in the first year of RMD required to take the distribution? Next year for me.
I have investment accounts with two different firms for my IRA's. After I calculate my RMD for the total of the two accounts, can I take the entire RMD amount from one of the accounts or must I take the appropriate amount from each account?
You can take the entire RMD from one IRA. You just need to aggregate the total value of all IRAs in your RMD calculation.
@@RootFP got it. thank you.
So if your birthday is later (at end of the year) you must use your age that you will be at the end of the year for the calculation ? Not your present age?
Given my SS and pension , I'll be taking enough to run out by time b4 I'm 90 if I make it .
Helpful
I’m glad!
On the last point on charitable distributions (QCDs) - can I donate to a private family foundation (501c3) of which I'm a director?
Great information, thank you. I'm 71 now and it seems that I need to take out my 1st RMD in 2022. When you say the amount is based on last year, do you mean 2020 tax year reported in 2021 on my 1040 or on my 2021 tax filing?
I believe if you turn 72 in 2022 you have to start your first RMD April 1 2023
@@Satjr35031 If you turn 72 in 2022, the 1st RMD is either in 2022 or delayed until April 2023, and the 2nd RMD is in 2023.
@@you78750 correct
I believe you must take an RMD by April 1st of the year you turn 72 (changed to 73?).
R.M.D.s as currently structured, are absolutely LUDICROUS. They should apply only to VERY high-income retirees, those who have income from other sources (S.S, pensions, annuities, etc) which exceed 2X the U.S. median household income, adjusted annually for inflation. Then..people of average means, wouldn't have to contend with all of these ABSURD retirement income planning "gymnastics", such as Roth-conversions, etc.
What about inherited ira’s? The passing of last year’s secure act says I have to liquidate the inherited Ira within 10 years. What is the most tax advantage way of doing this??
My RMD distribution is taxed and I don’t need the money! Sure I can put it in my brokerage account but it just generates more taxable income! Double taxation! What do you think of putting the money into life insurance and if I understand that you can take cash values out tax free.
How is it double taxation? You're only paying capital gains on the actual gained income. You're not paying taxes again on the basis. So you would rather pay an insurance company to take your money than pay 15%-20% on any profits made in a brokerage account?
What do I think? I think you've been sold something by an insurance salesman.
In your listing of accounts that need a minimum distribution, you left out 403(b) accounts (which is what I have). I hope you didn't leave out any other kinds of accounts.
403B is treated like a 401k.
@@joycewright5386 And he should have said that, but he didn't.
This video is excellent! Thanks for the useful information and effective presentation. Question: Do the new 2020 rules apply to everyone or only non spousal inheritance? I'm a little unclear on it and would appreciate some clarification. Thank you.
Thank you! They do not apply for spousal inheritances. If you inherit an IRA from a spouse you could still just turn that into your own IRA as beneficiary.
What happens if my life insurance company annuity fails to take out my December 2021-requested withdrawal until January 2022 ?
Thank you. The presentation confirmed many things that I had to dig for. Two questions. I have two RMDs to deal with. An inherited IRA which I received Oct '20 and took a distribution Dec '20 and will be taking another Dec '21. I also have a traditional IRA which requires the first RMD by 04-01-22.
I am retired and receive income from a pension and SS but have no earned income.
1. Does that exclude me from adding to a Roth IRA? I would love to use the RMDs to fund a Roth IRA as I don't need the funds.
2. (this question depends on the answer to #1 and is moot if I cannot convert to a Roth IRA.) For the 2022 RMD from the traditional IRA be made before 01-01-22? If there is an option to convert to a Roth IRA, the second RMD in December would be blocked by the 365 day rule.
The RMDs combined may push me up a bracket, but I understand marginal taxes, so just a bit more for the excess. There also capital gains that are at play with the market and selling a rental property.
Hi Gary,
To be eligible for a Roth IRA contribution you have to have earned income, so pension/SS wouldn’t count.
You can convert funds from your IRA to a Roth IRA, but the RMD amount can’t be converted. Only amounts above it could be.
My brother died intestate in 2019 with a 401k. He was 61 and named my Mom as the beneficiary. Mom died at age 91 in 2020 . 401k in 2021 was transferred to Mom's estate. Does the estate need to make RMDs? How much and for what years?
If I give my church $5,000 a year via weekly contributions, instead I could take $5,000 from RMD and not pay taxes. Am I correct in my thinking?
Yes, as long as you are at least 70.5 you can do a qualified charitable distribution direct from your IRA to the church/charity and it won't be included in your taxable income.
Any previous distributions prior to age 72 do not count or benefit as to RMD's? At age 62 I elected to take small monthly distributions and not apply for Social Security. My plan is to wait till or closer to full retirement age 66 10 months, then turn off distributions until required at age 72.
Previous distributions prior to age 72 don’t count towards your RMD. Previous distributions would lower your total account balance which would make your RMD lower than it otherwise would have been, but those distributions prior to 72 don’t count toward your required distribution.
@@RootFP Thank you!
What if I have to sell stock that I took a loss on in order to take the RMD?
Nothing
The only thing that matters is your age and account balance at end of year
How about converting Traditional IRA into Roth IRA during this period age 65 through 72 when the income is only Social Security & some investment income.
( Keeping the conversion amount within the 12% bracket )? Thus the inherited Roth IRA for the sons will still grow for next 10 years ! HARI HARI 🙏
There are different IRS tables for singles and married and married with age difference more than 10 yrs. I am 66.5 my wife is 10.5 yrs younger. Singles table gives about 19 yrs, married table gives 30 yrs. I think you should have mentioned it in your overview.
I believe there are new rules or a new interpretation on the part of the IRS in regard to inherited IRAs (and the 10 year rule) since this video was made. Maybe you can comment on this.
If you're still working, when do you have to start taking the RMD ??
You don’t have to take an RMD from your 401k if you’re still working at the company that sponsors the 401k and you don’t own 5% of the company. You do have to take RMDs from IRAs though even if you’re still working.
Age 72?
Do you think the Senate will follow the House's lead and forbidden IRA/Roth Conversions for ALL taxpayers in 2022?