Withholding from RMD'S

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Nowizard
Posts: 1582
Joined: Tue Oct 23, 2007 5:33 pm

Withholding from RMD'S

Post by Nowizard » Thu Sep 13, 2018 12:33 pm

In the past, I have taken my full RMD and paid Estimated Tax. However, it is somewhat inconvenient to do so now that my wife is also taking her RMD. I believe that Vanguard (or other source) will withhold up to 10% of a RMD for taxes if requested. How does that money get to the government's treasury? Does Vanguard send it and provide some type of documentation to the individual?

Tim

mhalley
Posts: 6138
Joined: Tue Nov 20, 2007 6:02 am

Re: Withholding from RMD'S

Post by mhalley » Thu Sep 13, 2018 1:05 pm

You can choose to have whatever amount you need to be withheld for taxes. Even 100% if you need to. Vanguard will send it to Unca Sam. I haven’t started rmds yet, but vanguard will send you the documentation (1099-R) I believe.
Are you enrolled in Vanguards RMD service?
https://personal.vanguard.com/pdf/s316.pdf?2210068614
Last edited by mhalley on Thu Sep 13, 2018 1:18 pm, edited 1 time in total.

sport
Posts: 7385
Joined: Tue Feb 27, 2007 3:26 pm
Location: Cleveland, OH

Re: Withholding from RMD'S

Post by sport » Thu Sep 13, 2018 1:18 pm

V will withhold for federal taxes and state taxes for some states. The money withheld goes to the appropriate government(s) and gets reported to you on your 1099-R. V has a rule that federal withholding must be at least 10% of the amount withdrawn. Beyond that, it can be any amount you wish. V will withhold a specified percentage, not a specified dollar amount. So, if you want a specific dollar amount, you have to choose a percentage that gets close. I cannot comment on the mechanics of state withholding because V will not withhold for my state. :annoyed

Austintatious
Posts: 773
Joined: Thu Sep 13, 2012 7:01 pm

Re: Withholding from RMD'S

Post by Austintatious » Thu Sep 13, 2018 1:20 pm

As mentioned by mhalley, they will withhold whatever amount you want. Now, if you are outside the U.S. or the money is to be dispersed outside the U.S., then they will automatically withhold 30%. See the end of section 2 of this description of the Vanguard rmd service:

https://personal.vanguard.com/pdf/rmd.pdf
.

anonenigma
Posts: 578
Joined: Thu Apr 21, 2011 11:58 pm

Re: Withholding from RMD'S

Post by anonenigma » Thu Sep 13, 2018 1:25 pm

Looks like TIAA's policy is similar: https://www.tiaa.org/public/pdf/forms/RMD.pdf

ResearchMed
Posts: 7410
Joined: Fri Dec 26, 2008 11:25 pm

Re: Withholding from RMD'S

Post by ResearchMed » Thu Sep 13, 2018 1:32 pm

anonenigma wrote:
Thu Sep 13, 2018 1:25 pm
Looks like TIAA's policy is similar: https://www.tiaa.org/public/pdf/forms/RMD.pdf
TIAA (and Schwab) will withhold state taxes in our state, whereas Vanguard will not.
So we pool the IRA's, and then have the total removed from TIAA or Schwab, so we can have both state and federal taxes withheld.

RM
This signature is a placebo. You are in the control group.

mhalley
Posts: 6138
Joined: Tue Nov 20, 2007 6:02 am

Re: Withholding from RMD'S

Post by mhalley » Thu Sep 13, 2018 1:40 pm

Wow, I did not realize that Vanguard will only withhold taxes on rmds for 26 states. Fortunately I only have my roths with them, better go check to see if fidelity does all 50......
Looks like fidelity will allow me to set a percent for my state. This is one subject I have never seen discussed on the boards. Schwab also appears to offer state tax withholding for all states.

Nowizard
Posts: 1582
Joined: Tue Oct 23, 2007 5:33 pm

Re: Withholding from RMD'S

Post by Nowizard » Thu Sep 13, 2018 2:18 pm

We are not enrolled in a program with Vanguard for withholding but will have them withhold for 2019. We have no state income tax in Tennessee. Thank you for the responses.

Tim

User avatar
Dale_G
Posts: 3110
Joined: Tue Feb 20, 2007 5:43 pm
Location: Central Florida - on the grown up side of 81

Re: Withholding from RMD'S

Post by Dale_G » Thu Sep 13, 2018 2:36 pm

sport wrote:
Thu Sep 13, 2018 1:18 pm
V will withhold for federal taxes and state taxes for some states. The money withheld goes to the appropriate government(s) and gets reported to you on your 1099-R. V has a rule that federal withholding must be at least 10% of the amount withdrawn. Beyond that, it can be any amount you wish. V will withhold a specified percentage, not a specified dollar amount. So, if you want a specific dollar amount, you have to choose a percentage that gets close. I cannot comment on the mechanics of state withholding because V will not withhold for my state. :annoyed
For clarification: Vanguard requires that a minimum of 10% be withheld IF there is an election to withhold taxes. You can choose not to have any taxes withheld or any amount from 10% to 100%.

If there are multiple IRAs, taxes can be withheld any one of the accounts or any combination.

Dale
Volatility is my friend

clydewolf
Posts: 722
Joined: Tue Jul 21, 2015 12:51 pm

Re: Withholding from RMD'S

Post by clydewolf » Thu Sep 13, 2018 3:28 pm

Last December I asked Vanguard to withhold 100% of a distribution for income tax. I was told the most they would withhold is 99% from the distribution for federal income tax. Vanguard had to mail me a check for the 1%.

I am not enrolled in their RMD service.

User avatar
Dale_G
Posts: 3110
Joined: Tue Feb 20, 2007 5:43 pm
Location: Central Florida - on the grown up side of 81

Re: Withholding from RMD'S

Post by Dale_G » Sat Sep 15, 2018 12:30 am

Okay - in the future we can tell people 0% or 10%-99%. I never wanted to give the feds 100% anyway, but I have given them 75% :twisted:

Dale
Volatility is my friend

Post Reply