Took my RMDs today

[disneysteve]

Earlier today I met with our CPA to do some year-end tax planning. Once we came up with our best estimate of our income for the year, he was able to tell me our likely tax burden. I used that info to set the withholding from my inherited traditional IRA RMD. It's convenient to do it that way rather than dealing with paying quarterly estimates. If the final numbers are off significantly, we can settle up in January to avoid any penalty for underpayment.

I also took the inherited Roth RMD but no tax impact there.

[Jluke]

What did you do with the money - invest it in taxable, savings account, or will you use it for expenses?

[kork13]

Not super familiar with tax intricacies ... I know that quarterly payments are not required if you're doing regular withholding ... Does that have to be throughout the year, or does it work to only do that in the last few months of the year?

Or was this more of an update to existing withholding that has already been happening the whole time?

[disneysteve]

What did you do with the money - invest it in taxable, savings account, or will you use it for expenses?

It will just fund our living expenses. The amount isn’t significant. After withholding it’s only in the $8,000 range. I normally take at least $5,000 out every month for expenses anyway so this just covers one regular monthly withdrawal plus a little more.

[disneysteve]

Not super familiar with tax intricacies ... I know that quarterly payments are not required if you're doing regular withholding ... Does that have to be throughout the year, or does it work to only do that in the last few months of the year?

Or was this more of an update to existing withholding that has already been happening the whole time?

This counts as if it were paid out over the year. A lot of retirees use their RMD this way to settle up taxes for the year.

[Jluke]

It will just fund our living expenses. The amount isn’t significant. After withholding it’s only in the $8,000 range. I normally take at least $5,000 out every month for expenses anyway so this just covers one regular monthly withdrawal plus a little more.

Ok. Basically a rounding error for you

[disneysteve]

Ok. Basically a rounding error for you

LOL. Well, it's 21K before the withholding which is a more substantial chunk of change but after the 13K in taxes are withheld, yeah, it's basically a month's worth of expenses.

[Fishindude77]

We don't do quarterly's anymore either.
Estimate income and tax burden to best of our ability and pay a lump sum once per year, then settle up the following year if required.

[disneysteve]

We don't do quarterly's anymore either.
Estimate income and tax burden to best of our ability and pay a lump sum once per year, then settle up the following year if required.

We’ve never done quarterly but I was always a W-2 employee.

[LivingAlmostLarge]

The withholding on RMD is the only way to avoid tax penalty. Now with AI the IRS is getting very nitpicky and able to catch a lot more.