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Level 3
posted Nov 22, 2024 1:29:15 PM

Withholding for Inherited IRA RMD

I took the RMD from my inherited IRA account for the 2024 tax year.  I was uncertain which withholding percentage I should choose for Federal tax.  I opted for the percentage equating to my tax bracket for the 2023 tax year.  My 2024 income will place me in a higher tax bracket.  

 

If my withholding from all income sources for 2024 exceeds my 2023 tax liability, am I correct in assuming that I will not be subject to a penalty for having chosen a withholding percentage for the RMD that is less than my 2024 tax bracket?

 

Thanks in advance for your insights!

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1 Best answer
Level 15
Nov 22, 2024 4:52:56 PM

If your 2023 AGI was more than $150,000 ($75,000 if married and filed separately), it will need to be at least 110% of your 2023 tax liability to qualify for this safe harbor, otherwise tax withholding of at least 100% of 2023 tax liability is sufficient.

 

You might also what to check state tax withholding to see if it's sufficient.

4 Replies
Level 15
Nov 22, 2024 4:30:03 PM

Correct. 

Level 15
Nov 22, 2024 4:52:56 PM

If your 2023 AGI was more than $150,000 ($75,000 if married and filed separately), it will need to be at least 110% of your 2023 tax liability to qualify for this safe harbor, otherwise tax withholding of at least 100% of 2023 tax liability is sufficient.

 

You might also what to check state tax withholding to see if it's sufficient.

Level 3
Nov 23, 2024 9:46:39 AM

Thank you!

Level 3
Nov 23, 2024 9:49:14 AM

Thank you for your reply, and for your advice about checking on the state income tax!