Good day. I am 70 years old and retired. In 2019, my income consisted of the following:
a) SSI payment of $10,000 (for the year),
b) Required Minimum Distribution (RMD) from my 401(K) of $1,500 (for the year),
c) RMD from my Group Variable Annuity/403(b) Tax Deferred Plan of $500 (for the year), and
d) A few hundred dollars interest from a savings account.
I have two questions:
1) I’ve read that individuals over 65 don’t need to file and pay taxes if their Earned Income is less than the standard deduction, which is $12,200 for 2019. I also read that SSI payments do NOT count towards Earned Income. If that’s true, since my two RMDs from my 401(K) and Group Variable Annuity/403(b) Tax Deferred Plan is less than the standard deduction, does this mean I do NOT need to file taxes, thus NOT pay any taxes?
2) For the RMD of $1,500 from my 401(K), my financial institution gave me the choice to withhold state and federal taxes, which I did. The 1099-R form from my financial institution showed State withholding 5% or $75, and Federal withholding 10% or $150.
If I don’t need to file and pay any taxes (based on the details I provided in my first question), did I make a mistake by choosing the option to withhold taxes from the RMD of my 401(K)? My financial institution did provide an option NOT to withhold taxes. I wasn’t sure if I must pay taxes on the RMD from my 401(K) no matter what because of the way a 401(K) works, or if my scenario of my total Earned Income being less than the standard deduction comes into play, thus I should NOT have chosen to withhold taxes and essentially lost that money.
Thank you!!
