Correct, but he's doing a Roth CONTRIBUTION, not a CONVERSION...sport wrote: ↑Sat Dec 09, 2017 11:57 amAs I understand the rules, the first withdrawals from a TIRA must be used to satisfy RMD requirements. That money is not allowed to be used for Roth conversion (it can be used for QCDs). After the RMD has been met, Roth conversions may then be done.SpringMan wrote: ↑Sat Dec 09, 2017 11:19 amNot your situation but for others benefit, money converted from a traditional IRA to a Roth does not satisfy your RMD requirement. Of course moving the RMD to your taxable and using that money as a new contribution to a Roth is acceptable when you otherwise qualify for a Roth.plumberboy wrote: ↑Fri Dec 08, 2017 2:42 pm After being fully retired for several years I decided to take a part time job with a food catering company to keep myself occupied. That qualifies me for a Roth IRA so part of my RMD pays state and federal taxes, part into a Roth and the rest into Vanguard personal account .
What did you do with your first RMD withdrawal money?
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Re: What did you do with your first RMD withdrawal money?
Attempted new signature...
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Re: What did you do with your first RMD withdrawal money?
Same here.
We both will start drawing RMD's in 2018, with the primary use of the funds to pay taxes on our various sources of income, that don't have taxes paid at the time of monthly income. We'll be up to five separate income sources in 2018, when my age 70 SS begins, with no FIT paid.
However, that is nothing different than what we've been doing over many years; retirement income taxes have always been paid out of our TIRA holdings (including FIT on the TIRA withdrawals).
Anything left over after FIT? I'm sure we will have a use for the excess funds ...
- Ron
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Re: What did you do with your first RMD withdrawal money?
V will put your $ into the taxable acct Bobmontanagirl wrote: ↑Thu Dec 07, 2017 9:06 am When you get RMDs from Vanguard, can they go straight to a taxable account at VG, or do they need to come all the way "home" to your bank, and then be reinvested (for appearance's sake)?
Re: What did you do with your first RMD withdrawal money?
Livesoft are you alluding to the idea that if most of my pretax investments are in Wellington that I should not withdraw gains from there for RMD's?livesoft wrote: ↑Thu Dec 07, 2017 9:30 am I didn't read the study in the first quote, but here is the reference:
Poterba, Venti, and Wise "The Drawdown of Personal Retirement Assets" NBER Working Paper 16675 (January 2011)
As an aside, perhaps one of the reasons for Wellington and Wellesley to do so well is that no one ever withdraws any significant money from these funds ever.
Jim
"Watch out where the huskies go and don't you eat that yellow snow". Frank Zappa
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Re: What did you do with your first RMD withdrawal money?
The overwhelming number of responders that reinvest RMDs reifies my faith in Bogleheads. I laud your high degree of financial responsibility. I choose to spend mine on luxuries, but may reinvest next year's since I don't have a burning desire for something new now. My main takeaway is that each of us has a unique situation and priorities. Many don't seem to need to spend RMDs, and many seem just to prefer not to.
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Re: What did you do with your first RMD withdrawal money?
OTOH, there are those that won't spend since they fear they will never have "enough"...zengolf2011 wrote: ↑Tue Dec 12, 2017 12:25 pm The overwhelming number of responders that reinvest RMDs reifies my faith in Bogleheads. I laud your high degree of financial responsibility. I choose to spend mine on luxuries, but may reinvest next year's since I don't have a burning desire for something new now. My main takeaway is that each of us has a unique situation and priorities. Many don't seem to need to spend RMDs, and many seem just to prefer not to.
https://www.aarp.org/money/investing/in ... spend.html
- Ron
Re: What did you do with your first RMD withdrawal money?
Please explain the underlined section. Sometimes you withdraw less than the RMD? Then you must pay a penalty on the shortfall, or it is not really a RMD?
Or you can pay the taxes from taxable or have it withheld from your income stream(s) [pension, SS].
Re: What did you do with your first RMD withdrawal money?
Withdrawal is the money you remove from your portfolio. RMD is a distribribution that moves money from one part of your portfolio to another. The reason for being so pedantic about this is to short circuit the possible confusion that things that move around in the portfolio like distributions of dividends, capital gains, and RMDs should not be confused with actually withdrawing and spending money. This is designed to remain clear about what is return to a portfolio, what is withdrawal from a portfolio, and what is changing asset location or asset allocation in a portfolio.
You are correct that you can meet the tax cost by paying for it from income sources rather than by withdrawing money from the portfolio to pay the tax. My comments were incomplete on that count.
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Re: What did you do with your first RMD withdrawal money?
Yes, Ron, I'm sure that's part of it for some. Knowing that I have separate accounts dedicated to specific purposes helps free me psychologically to spend my RMDs. I don't know if this would have the same effect for others. There is no such thing as absolute security. BTW, Mr. Bogle's book Enough is one of my favorites.Ron wrote: ↑Tue Dec 12, 2017 2:05 pmOTOH, there are those that won't spend since they fear they will never have "enough"...zengolf2011 wrote: ↑Tue Dec 12, 2017 12:25 pm The overwhelming number of responders that reinvest RMDs reifies my faith in Bogleheads. I laud your high degree of financial responsibility. I choose to spend mine on luxuries, but may reinvest next year's since I don't have a burning desire for something new now. My main takeaway is that each of us has a unique situation and priorities. Many don't seem to need to spend RMDs, and many seem just to prefer not to.
https://www.aarp.org/money/investing/in ... spend.html
- Ron
Re: What did you do with your first RMD withdrawal money?
Haven't started taking them yet, but my plan is to pay taxes, spend a good portion on travel, and then put the rest into my taxable accounts.
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Re: What did you do with your first RMD withdrawal money?
The way I made my comment was sort of misleading. A Roth Ira was the only kind of IRA I qualified for after the age of 70 1/2. I had no Roth IRA prior to getting the part time job. The RMD from the TIRA is transferred directly into my Vanguard personal account and then the appropriate amount is transferred to the Roth account.The wages from the part time job are never deposited directly to the Vanguard personal account.The Wizard wrote: ↑Sat Dec 09, 2017 12:04 pmCorrect, but he's doing a Roth CONTRIBUTION, not a CONVERSION...sport wrote: ↑Sat Dec 09, 2017 11:57 amAs I understand the rules, the first withdrawals from a TIRA must be used to satisfy RMD requirements. That money is not allowed to be used for Roth conversion (it can be used for QCDs). After the RMD has been met, Roth conversions may then be done.SpringMan wrote: ↑Sat Dec 09, 2017 11:19 amNot your situation but for others benefit, money converted from a traditional IRA to a Roth does not satisfy your RMD requirement. Of course moving the RMD to your taxable and using that money as a new contribution to a Roth is acceptable when you otherwise qualify for a Roth.plumberboy wrote: ↑Fri Dec 08, 2017 2:42 pm After being fully retired for several years I decided to take a part time job with a food catering company to keep myself occupied. That qualifies me for a Roth IRA so part of my RMD pays state and federal taxes, part into a Roth and the rest into Vanguard personal account .
Re: What did you do with your first RMD withdrawal money?
Agreed.sport wrote: ↑Sat Dec 09, 2017 11:57 amAs I understand the rules, the first withdrawals from a TIRA must be used to satisfy RMD requirements. That money is not allowed to be used for Roth conversion (it can be used for QCDs). After the RMD has been met, Roth conversions may then be done.SpringMan wrote: ↑Sat Dec 09, 2017 11:19 amNot your situation but for others benefit, money converted from a traditional IRA to a Roth does not satisfy your RMD requirement. Of course moving the RMD to your taxable and using that money as a new contribution to a Roth is acceptable when you otherwise qualify for a Roth.plumberboy wrote: ↑Fri Dec 08, 2017 2:42 pm After being fully retired for several years I decided to take a part time job with a food catering company to keep myself occupied. That qualifies me for a Roth IRA so part of my RMD pays state and federal taxes, part into a Roth and the rest into Vanguard personal account .
Best Wishes, SpringMan
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Re: What did you do with your first RMD withdrawal money?
Put into CD checking acount.
- Jazztonight
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Re: What did you do with your first RMD withdrawal money?
I took social security at 66. Now, several years later, I am receiving my RMD.
The combination gives me enough to live on without tapping other investments. I'm a lucky guy.
The combination gives me enough to live on without tapping other investments. I'm a lucky guy.
"What does not destroy me, makes me stronger." Nietzsche
Re: What did you do with your first RMD withdrawal money?
Yes, that should be a secure plan, just keeping in mind that spending RMD is tapping the investments that the RMD is taken from. Whether or not it makes sense to think of those investments and the "other" investments to not just be your investments I am less sure of.Jazztonight wrote: ↑Tue Jan 23, 2018 9:32 pm I took social security at 66. Now, several years later, I am receiving my RMD.
The combination gives me enough to live on without tapping other investments. I'm a lucky guy.
- Doom&Gloom
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Re: What did you do with your first RMD withdrawal money?
Paid off a 0% rate balance transfer from a credit card, paid my HELOC almost to 0, and will probably squander most of the remainder.
Re: What did you do with your first RMD withdrawal money?
+1. Looking forward to working with spouse to designate the beneficiaries of the QCDs when turn 70.5 in August this year.
Re: What did you do with your first RMD withdrawal money?
This post has a little bit of age on it, but I wanted to follow up on one of the responders that mentioned putting their RMD in a 529 plan. I'm presuming this means that you can take your RMD then use the proceeds to fund a 529 to pay the tuition for a family member that maybe entering college thereby helping your grandchild as well as avoiding the deferred taxation that is now due on your RMD. Correct?
Re: What did you do with your first RMD withdrawal money?
For the last 5 years we have taken about double the required RDM to just under the $170k medicare part B limit where the premium now goes from $134 to $187.50. Most of those funds we give to charity, kids and 529 money for the grandkids. Never thought the market would be this good to us.