RMD due by December 31

2 replies
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What amount are the tax gods looking for when it asks for RMD due by December 31, 2024? Is it the taxable amount listed, or some other amount?

O

Opus 17Answer

Level 15

It's not clear if you are asking about financial planning, or how to file your return.

For financial planning purposes, you can't keep your tax-free retirement funds forever, you have to withdraw a certain amount each year and pay the tax. The amount you should have withdrawn in 2024 is based on the ending balance on 12/31/23 and your life expectancy. You can use the tables in publication 590-B, but it is simpler to ask the plan custodian. You can always withdraw more, but you must withdraw at least the minimum amount.

To complete your tax return, Turbotax needs to know the amount of the RMD because there are certain things you can't do with the RMD that you can do with other money. So if your RMD was $5000 and you withdrew $10,000, that's fine, just say the RMD portion was $5000. If you withdraw less than the required minimum, there is a penalty but you can ask for a waiver.

And if you have a defined pension, rather than an account like an IRA or 401k, the entire pension payment is considered to be a RMD, since the pension payout is based partly on your life expectancy.

VolvoGirl

Level 15

It’s a calculated amount on your 2023 account balance. Ask the plan for it. They should have told you at the beginning of the year how much you need to take.

Is it for a pension? Say all of it is the RMD. If you need to start taking the RMD it will ask you if it is the RMD. Say yes. Anything your pension pays you is considered to be the RMD. Traditional pensions automatically fulfill the rules of an RMD. So for the RMD question put in the same amount as box 1.

O

Opus 17

Answer

Level 15

It's not clear if you are asking about financial planning, or how to file your return.

For financial planning purposes, you can't keep your tax-free retirement funds forever, you have to withdraw a certain amount each year and pay the tax. The amount you should have withdrawn in 2024 is based on the ending balance on 12/31/23 and your life expectancy. You can use the tables in publication 590-B, but it is simpler to ask the plan custodian. You can always withdraw more, but you must withdraw at least the minimum amount.

To complete your tax return, Turbotax needs to know the amount of the RMD because there are certain things you can't do with the RMD that you can do with other money. So if your RMD was $5000 and you withdrew $10,000, that's fine, just say the RMD portion was $5000. If you withdraw less than the required minimum, there is a penalty but you can ask for a waiver.

And if you have a defined pension, rather than an account like an IRA or 401k, the entire pension payment is considered to be a RMD, since the pension payout is based partly on your life expectancy.