Are RMD's substitute for estimated quarterly payments?

[vets10069]

I'm thinking of taking my rmd in Dec. that would be equal or greater than the years tax liability.

[jerry2000 · Accepted solution]

No, an RMD is not a substitute for quarterly payments, and RMD is a distribution from your deferred account, it is not a tax payment. To avoid late payment penalties, you have to make quarterly payments on or before the due date for each. Just making one large payment at the end of the year doesn't satisfy the requirements.

[dmertz]

It *can* potentially be a substitute for quarterly tax payments if sufficient portion portion of the RMD is allocated to tax withholding.  Unlike estimated tax payments, tax withholding by default is treated as one-fourth paid in each of the tax quarters of the year.

[vets10069]

I would have an amount equal to my tax liability withheld from the rmd. With this suffice for est. quarterly payments?

[dmertz]

Yes, this would replace the need for quarterly estimated tax payments.

[vets10069]

What is the tax publication number/section where this is addressed?

[dmertz]

It's evident in the instructions for Form 2210 line 19:

For withheld federal income tax and excess social security or tier 1 railroad retirement tax (RRTA), you are considered to have paid one-fourth of these amounts on each payment due date unless you can show otherwise.

[mhill11]

True enough, the IRS smoothes payments to them directly from your RMD over the 4 quarters.

My question is does New York State do the same thing?