My wife turns 70.5 Feb 2017. Can we cash out on a traditional IRA this January and pay the first RMD by simply paying the tax due on this IRA account closure this April.

[macuser_22 · Accepted solution]

The amount of the RMD needs to be calculated using the total December 31, 2016 value of *all* Traditional IRA accounts although the RMD can be taken from any, or any combination of accounts as long as it is taken by December 31,2017 (or put off until April 1, 2018 for the first RMD - If put off then both the 2018 RMD also must be taken before the end of 2018).

The Traditional IRA distribution taken in Feb of 2017 that satisfies or exceeds the 2017 RMD will be reported on your 2017 tax return next year in 2018, not on your 2016 tax return.    Any tax that is withheld will also apply to your 2017 tax return.

Neither the RMD or tax withheld on a 2017 distribution will have anything to do with the 2016 tax return due this April in 2017.

[SweetieJean]

Taxes paid in April are for your 2016 return.

Of course, you can have 2017 taxes withheld from the RMD, or make a 2017 estimated tax payment.

[kb22]

Thanks. So next year we will have covered first RMD and can pay RMD with 2017 tax return?

[SweetieJean]

Any RMD that she takes in 2017 is reported on the 2017 tax return (filed in early 2018). She will get a 1099-R for it in Jan 2018.

[kb22]

Will closing the IRA CD out this month and paying tax this April cover her first RMD requirement?

[SweetieJean]

Does she have more than one IRA? See this:
<a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-tege/uniform_rmd_wksht.pdf">https://www.irs.gov/pub/irs-tege/uniform_rmd...>

[kb22]

Yes but closing this one and paying tax will more than cover the other IRAs.

[SweetieJean]

Then you/she should be fine. But keep in mind that there may be tax law changes (and tax brackets) for 2017.