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Post by Chahta on Sept 17, 2023 20:07:32 GMT
I will turn 73 in 2025. So my first RMD must be withdrawn by 4/1/2026. Is that based on the EOY 2025 balance or EOY 2024 balance? Is the taxable income for the 2025 (filed in 2026) or 2026 (filed in 2027) tax return? Then the second RMD must be taken by 12/31/2026, based on the EOY 2025 balance, for the 2026 tax return? Are these correct?
Theoretically 2 RMDs could be on the 2026 tax return it seems. Thanks.
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Post by liftlock on Sept 18, 2023 0:05:11 GMT
I will turn 73 in 2025. So my first RMD must be withdrawn by 4/1/2026. Is that based on the EOY 2025 balance or EOY 2024 balance? Is the taxable income for the 2025 (filed in 2026) or 2026 (filed in 2027) tax return? Then the second RMD must be taken by 12/31/2026, based on the EOY 2025 balance, for the 2026 tax return? Are these correct? Theoretically 2 RMDs could be on the 2026 tax return it seems. Thanks. RMDs become taxable income in the year the distributions are taken and are reported on the tax return filed the following year for the year the distributions are taken. RMDs for any given tax year are based on your EOY balance for the prior year. Your RMD for the 2025 tax year will be based on your year end balance for 2024. Your first RMD for 2025 can be taken in 2025 or deferred until 4/1/2026. If you defer your first RMD until 2026, you will need to take 2 RMDs during 2026, your RMD for 2025 and your RMD for 2026. Only the first years RMD can be deferred until April 1 of the following year. www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs |
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Post by Chahta on Sept 18, 2023 4:25:32 GMT
So my first RMD will be based on 2024 EOY balance. If it is taken in 2025 then it will be reported as income on my 2025 tax return. If delayed until 2026 it will be reported on my 2026 tax return along with my RMD for 2026.
The IRS publication is not clear to me about which year end balance to use for the first RMD.
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Post by Capital on Sept 18, 2023 9:28:25 GMT
So my first RMD will be based on 2024 EOY balance. If it is taken in 2025 then it will be reported as income on my 2025 tax return. If delayed until 2026 it will be reported on my 2026 tax return along with my RMD for 2026. The IRS publication is not clear to me about which year end balance to use for the first RMD. , also if you do not make your first (2024) RMD in 2025, that amount will still be in your IRA at 2025 EOY and will be included in your 2025 RMD calculation. |
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Post by yogibearbull on Sept 18, 2023 12:14:21 GMT
Chahta , you can only defer the first RMD to April (from December) but that doesn't modify any other related details EXCEPT the taxes due - they are due in the year that you actually take it. A good reason to defer may be if you are expecting a sudden boost in your 2025 income (lots of CGs, inheritance, lottery,  etc). Make sure about the impact of double-RMD in 2026 on your overall tax, Social Security tax, Medicare IRMAA, etc. In most cases, delay may cause more tax problems.
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Post by liftlock on Sept 19, 2023 13:33:32 GMT
So my first RMD will be based on 2024 EOY balance. If it is taken in 2025 then it will be reported as income on my 2025 tax return. If delayed until 2026 it will be reported on my 2026 tax return along with my RMD for 2026. The IRS publication is not clear to me about which year end balance to use for the first RMD. Your required minimum distribution for the year 2025 will be based on your year end account balance for 2024, regardless of whether you elect to take it in 2025 or 2026. Calculating the required minimum distribution: The required minimum distribution for any year is the account balance as of the end of the immediately preceding calendar year divided by a distribution period from the IRS’s “Uniform Lifetime Table.” www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmdsEarly in 2025 your IRA custodian will file IRS Form 5498 with the IRS and provide a copy to you. Form 5498 for 2025 will report your 2024 year end account balance and your RMD for 2025. financialducksinarow.com/1049/ira-rmd-reporting/ |
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Post by liftlock on Sept 19, 2023 13:36:43 GMT
So my first RMD will be based on 2024 EOY balance. If it is taken in 2025 then it will be reported as income on my 2025 tax return. If delayed until 2026 it will be reported on my 2026 tax return along with my RMD for 2026. The IRS publication is not clear to me about which year end balance to use for the first RMD. , also if you do not make your first (2024) RMD in 2025, that amount will still be in your IRA at 2025 EOY and will be included in your 2025 RMD calculation. makes a good point. If you defer your 2025 RMD until 2026 it will be included in your year end account balance for 2025 and increase your RMD for 2026. |
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Post by Mustang on Oct 3, 2023 7:58:21 GMT
RMDs are a fairly small percentage of the total IRA. At age 72 its 3.6%. Deferring the RMD until the next year will increase 2026 taxes but that is because two distribution were received in one year. I doubt it will have enough effect to matter on the 2025 EOY account balance or the 2026 distribution. If the market drops 10% having 3.6% more will not keep the following year's distribution from being smaller. It is totally dependent upon the IRA's performance. My RMDs have increased and decreased as much as 13% between years.
I had no reason to defer my first RMD even though I didn't need it. It wouldn't have changed my tax bracket in either year and it was immediately re-invested.
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etc). Make sure about the impact of double-RMD in 2026 on your overall tax, Social Security tax, Medicare IRMAA, etc. In most cases, delay may cause more tax problems.
