For Alan S and others 2020 Covid-19 RMD

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pablolo
Posts: 329
Joined: Fri Jun 20, 2008 7:32 pm

For Alan S and others 2020 Covid-19 RMD

Post by pablolo » Mon Jun 29, 2020 4:52 pm

Hello I took my 2020 rmd in January I took out 16000 dollars
and had 27% off yet taken out for federal taxes I have two questions is there any reason why I should not put this money back into my traditional IRA with vanguard and secondly can I recoup the federal taxes that were taken out in January and have the IRS I returned it to my traditional IRA thank you

Penguin
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Joined: Sat Mar 03, 2007 1:52 pm

Re: For Alan S and others 2020 Covid-19 RMD

Post by Penguin » Mon Jun 29, 2020 5:20 pm

pablolo wrote:
Mon Jun 29, 2020 4:52 pm
Hello I took my 2020 rmd in January I took out 16000 dollars
and had 27% off yet taken out for federal taxes I have two questions is there any reason why I should not put this money back into my traditional IRA with vanguard and secondly can I recoup the federal taxes that were taken out in January and have the IRS I returned it to my traditional IRA thank you
If you need the money to spend then don't put it back into the tIRA.
If you are sure that you will pay a higher rate of tax in the future, you may not want to put the money back into the tIRA.
Your taxes are already in the pocket of the IRS, you can't get that money back from them.
However, you can reduce your other estimated tax payments and withholding for the year, if you wish.
If your withholding is too high for the year then you will get a refund when you file your taxes.
Jon

Topic Author
pablolo
Posts: 329
Joined: Fri Jun 20, 2008 7:32 pm

Re: For Alan S and others 2020 Covid-19 RMD

Post by pablolo » Mon Jun 29, 2020 5:25 pm

Apache, thank you so much I don't need the money so I will redirected back to my IRA

jebmke
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Re: For Alan S and others 2020 Covid-19 RMD

Post by jebmke » Mon Jun 29, 2020 5:25 pm

If you roll the full $16K back to your IRA (I think the deadline is August 31) then the taxes that were withheld will be refunded when you file your 2020 tax return (that is, the refund/amount owed will be lower by the amount withheld).
When you discover that you are riding a dead horse, the best strategy is to dismount.

Alan S.
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Re: For Alan S and others 2020 Covid-19 RMD

Post by Alan S. » Mon Jun 29, 2020 6:05 pm

I agree with the above, and assume indicating "Covid 19" does NOT mean that you qualify for a corona virus related distribution (CRD). Rather, you do not qualify for a CRD but just want to roll back the January RMD amount which is now allowed under Notice 2020-51.

You can use your other money to roll back the entire 16,000 and there will be no taxable income from this distribution in 2020. If you only roll back the amount you received, then the 4320 that was withheld will itself be taxable in 2020.

Topic Author
pablolo
Posts: 329
Joined: Fri Jun 20, 2008 7:32 pm

Re: For Alan S and others 2020 Covid-19 RMD

Post by pablolo » Sun Jul 05, 2020 11:34 am

This is the OP again . I just remembered that I have ee savings bonds from 1991 to 1993 worth approximately $34,000 so I was thinking of first returning the $16,000 find my RMD back to my traditional IRA and then cash out this year some of my ee savings bonds got where they equal the amount of taxes that I withdrew from my IRA about $4,300.

Affable at 50
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Re: For Alan S and others 2020 Covid-19 RMD

Post by Affable at 50 » Sun Jul 05, 2020 8:11 pm

pablolo wrote:
Sun Jul 05, 2020 11:34 am
This is the OP again . I just remembered that I have ee savings bonds from 1991 to 1993 worth approximately $34,000 so I was thinking of first returning the $16,000 find my RMD back to my traditional IRA and then cash out this year some of my ee savings bonds got where they equal the amount of taxes that I withdrew from my IRA about $4,300.
OP,

Depending on where you stand in your tax bracket and how close you are to the next bracket, cashing out some the savings bonds in 2020. In 2021 through 2023, when your bonds mature you could see a significant bump in taxes in years that your RMDs will return.

If the ee bonds are held in Treasury Direct they will be automatically cashed out one they hit the 30 year mark. Also consider timing any early redemptions to match up with the dates your interest is accrued.

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