# RMD question



## C50 (Dec 1, 2022)

I'm nowhere close RMD age but like to look ahead.

If I have a retirement account of one million dollars earning 3% interest and my RMD is $30k a year does that mean the interest covers my RMD?  So the principal remains intact? Or do I need to draw down the principal such as drawing out the $30k in interest and $30k in principal,  then it becomes less every year as the principal decreases.


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## bowmore (Dec 1, 2022)

The short answer is no.Your RMD is calculated on the value of your IRA on 31 December. At that point you will have  $1 million plus $30K, or $1,030,000. The RMD at 72 divisor is 27.5 so your RMD is a bit over $37.455
But, the divisor reduces each year, so you have to take more out as an RMD. At age 73, the divisor is 26.5. I use a spreadsheet to calculate my RMD each year.


ageBalance             Balance+Interest               RMD721000000​1030000​37455​73992545​1022322​38578​74983744​1013256​39736​
​​​​​​


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## Harry Le Hermit (Dec 1, 2022)

bowmore said:


> so your RMD is a bit over $3,735


Sorry, but you left a digit off. $37,345, would be closer.

@C50 ... 
https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions


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## C50 (Dec 1, 2022)

bowmore said:


> The short answer is no.Your RMD is calculated on the value of your IRA on 31 December. At that point you will have  $1 million plus $30K, or $1,030,000. The RMD at 72 divisor is 27.5 so your RMD is a bit over $3,735.
> But, the divisor reduces each year, so you have to take more out as an RMD. At age 73, the divisor is 26.5. I use a spreadsheet to calculate my RMD each year.



Thank you, makes sense.


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## C50 (Dec 1, 2022)

Harry Le Hermit said:


> Sorry, but you left a digit off. $37,345, would be closer.
> 
> @C50 ...
> https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions



Thanks for the link.


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## Harry Le Hermit (Dec 1, 2022)

C50 said:


> Thanks for the link.


I am not sure the makeup of your savings, but consider the differences in IRA's and especially 401(k). You can lump traditional IRAs into one pile for calculating, but must treat each 401(k) separately.


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## leastlongprime (Dec 26, 2022)

I'm beginning to investigate, Qualified Charitable Donation (QCD) for IRAs.
Any QCD must be completed by 12/31/2022 for 2022 tax year. Pretty simple.
Probable for a least one of our IRA's for '23 tax year.  I'll start doing tax scenarios this last week of 2022.


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## OneEyedDiva (Dec 27, 2022)

leastlongprime said:


> I'm beginning to investigate, Qualified Charitable Donation (QCD) for IRAs.
> Any QCD must be completed by 12/31/2022 for 2022 tax year. Pretty simple.
> Probable for a least one of our IRA's for '23 tax year.  I'll start doing tax scenarios this last week of 2022.


My traditional IRA makes up a fairly small portion of my investments since I opted for a Roth as soon as I became aware of it. I always use my RMD for St. Jude and it used to get sent directly to them. Now Schwab sends the check to me then I have to send it off, but it shows as if the RMD went directly to St. Jude. I hope they change it back to the way it was. Anyway...because it's a QCD, it's non taxable and I wind up donating more than what I was doing when I was a St. Jude Partner in Hope.


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## leastlongprime (Jan 1, 2023)

C50 said:


> I'm nowhere close RMD age but like to look ahead.
> 
> If I have a retirement account of one million dollars earning 3% interest and my RMD is $30k a year does that mean the interest covers my RMD?  So the principal remains intact? Or do I need to draw down the principal such as drawing out the $30k in interest and $30k in principal,  then it becomes less every year as the principal decreases.


The best one can do, is to have interest credited soon after 01 Jan. Preferably annual interest.
And  pay the RMD on 31 Dec.
Assuming you have a stock/bond/CD account. 
Could be other strategies with other types IRA investments-Income.


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## Sawfish (Jan 1, 2023)

Harry Le Hermit said:


> I am not sure the makeup of your savings, but consider the differences in IRA's and especially 401(k). You can lump traditional IRAs into one pile for calculating, but must treat each 401(k) separately.


For 401ks, if you have more than one, each from  different employer as you change jobs, you can do either:

1) leave it under the company's administration; or 
2) roll it forward into the new company's 401k; or
3) roll it out into a "rollover IRA" in your control

I'm not sure. I've only done #3, and as a consequence never had more than 1 401k at any given time.

Or are we talking about something different?


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## Harry Le Hermit (Jan 1, 2023)

Sawfish said:


> Or are we talking about something different?


https://www.irs.gov/retirement-plan...quired from other,each of those plan accounts.


> Can an account owner just take a RMD from one account instead of separately from each account?
> 
> An IRA owner must calculate the RMD separately for each IRA that he or she owns, but can withdraw the total amount from one or more of the IRAs. Similarly, a 403(b) contract owner must calculate the RMD separately for each 403(b) contract that he or she owns, but can take the total amount from one or more of the 403(b) contracts.
> 
> However, RMDs required from other types of retirement plans, such as 401(k) and 457(b) plans have to be taken separately *from each* of those plan accounts.


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## Sawfish (Jan 1, 2023)

Harry Le Hermit said:


> https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions#:~:text=However, RMDs required from other,each of those plan accounts.


That assume you have separate 401ks and IRSs, which is a bit different from what I'm postulating. I'm saying that I think it's possible to have only ONE 401k, and this would be the one with your active employer, ostensibly if you retired and left the money with them.

I'm saying that each time I change jobs I rolled that companies 401k into a rollover IRA under Schwab, and that I did this several times, including after I left my last employer when I retired.

I *believe* that I ended up with only one large rollover IRA, that was a combination of all 401ks I'd ever had. So at the end, I had one large rollover IRA and a couple of other IRAs/Roths that I put together when contracting or otherwise was trying to be thrifty.

But I'm not sure, and I think you know a lot more about this than I do, so... :^)


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## Harry Le Hermit (Jan 1, 2023)

Sawfish said:


> That assume you have separate 401ks and IRSs, which is a bit different from what I'm postulating. I'm saying that I think it's possible to have only ONE 401k, and this would be the one with your active employer, ostensibly if you retired and left the money with them.
> 
> I'm saying that each time I change jobs I rolled that companies 401k into a rollover IRA under Schwab, and that I did this several times, including after I left my last employer when I retired.
> 
> ...


It is about current 401(k)s when discussing RMDs.


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## Jean-Paul (Jan 1, 2023)

I would not use advice from any forum in tax or financial matters. Worth it to pay an experienced CPA, tax préparer or your financial advisor 


Jon


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## leastlongprime (Jan 2, 2023)

Jean-Paul said:


> I would not use advice from any forum in tax or financial matters. Worth it to pay an experienced CPA, tax préparer or your financial advisor
> 
> 
> Jon


In fact, interview a couple. Minimally get a accumulation and decumulation plan-projection. 
Those FA who sell MF, won't encourage annuities. OTOH, Insurance people won't do MF. 
goodluck


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## mathjak107 (Jan 3, 2023)

C50 said:


> I'm nowhere close RMD age but like to look ahead.
> 
> If I have a retirement account of one million dollars earning 3% interest and my RMD is $30k a year does that mean the interest covers my RMD?  So the principal remains intact? Or do I need to draw down the principal such as drawing out the $30k in interest and $30k in principal,  then it becomes less every year as the principal decreases.


You need to take the required percentage of the retirement account balance …how much you have to draw out percentage wise changes yearly as well as the balance  changes yearly …

if you are still working , in most cases 401k money is not added in..

the percentage you need to take increases yearly.

you can see how it’s calculated by the chart in this article .

So as an example first year at 72 you would divide the balance by 27.4 years .

by age  85 you are dividing the balance by  16 years

at age 90 you are dividing by 12.2 years.

each year the balance changes so the amount being divided changes 

https://smartasset.com/retirement/rmd-table


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## leastlongprime (Friday at 11:17 PM)

OneEyedDiva said:


> My traditional IRA makes up a fairly small portion of my investments since I opted for a Roth as soon as I became aware of it. I always use my RMD for St. Jude and it used to get sent directly to them. Now Schwab sends the check to me then I have to send it off, but it shows as if the RMD went directly to St. Jude. I hope they change it back to the way it was. Anyway...because it's a QCD, it's non taxable and I wind up donating more than what I was doing when I was a St. Jude Partner in Hope.


when wife decided to downsize and move closer to son, I had to sell off most Roth and some CD accounts to fund future home down payment,  in a more expensive location. We could not take higher IRA withdrawals without triggering IRMAA. 

OP, Personally, too much in tax preferred instruments (Roths, IRAs, 401ks, Annuities) can bite you in the rear.


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## mathjak107 (Yesterday at 7:16 AM)

Roths do NOT count towards Irma surcharges at all


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## leastlongprime (Yesterday at 7:53 AM)

mathjak107 said:


> Roths do NOT count towards Irma surcharges at all


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## mathjak107 (Yesterday at 8:07 AM)

Huh ?…where is your post that goes with my reply ?


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## leastlongprime (Yesterday at 8:36 AM)

^
Its still very early on the western states. 
I'm still in bed.
Couldn't edit properly.

What's to reply? Your statement is correct, Roth does not count towards taxable income, thus does not trigger IRMAA.

However, to get enough purchase funds$$ without triggering IRMAA, two years hence in a new state, new cost of living experience, " we could not take higher IRA withdrawals without triggering IRMAA"...."


leastlongprime said:


> OP, Personally, too much in tax preferred instruments (Roths, IRAs, 401ks, Annuities) can bite you in the rear.


Good morning.
Time to get my coffee.


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## oldmontana (Yesterday at 8:42 AM)

Our IRA's are with TD Amertrade and they give us the RMD amount.


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## mathjak107 (Yesterday at 8:48 AM)

Fidelity has all our IRAs so it’s easy to automate …we do nothing except reinvest the portion in our taxable account that is over what we can safely draw


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