Financial Advice Q&A

New Member
o2bretired
Posts: 1
Question
How do I handle my IRA RMD?
[ Edited ]

I turn 70 1/2 this year so am required to do annual RMD from IRA accounts. When I do that can I request or have USAA take out taxes so that I don't have to come up with those later at tax time?

Other Answers: 1
Community Manager
JosephMontanaro
Posts: 63

With the year winding down we're seeing a lot more folks scrambling to take care of their RMD obligation. As you know the requirement to start removing money from your traditional IRA begins once you hit age 70 1/2. Let me give you the bottom line up front:  Give one our representatives a call at 800-771-9960 to help you get things squared away. They will be help you complete the appropriate USAA forms, set up tax withholding (yes, you can decide how much you want to send to the IRS so you avoid a big bill at tax filing time), meet all the deadlines and make it automatic in the future.

 

Now let me cover a few of the details that you will soon discover:

  • Your first distribution must be taken by April 1st of the year after your turn 70 1/2. After the initial distribution, all future distributions will have to be taken before the end of the calendar year. If you defer your first distribution to the year following age 70 1/2 you will have to take two distributions that year.
  • The distribution is calculated by taking the prior year end value of the IRA and dividing by an IRS factor based on your age (and if your spouse is more than 10 years younger, you and your spouse's age). The tables and all the details can be found in IRS Publication 590. Also, you can type "RMD calculator" in the search box here on usaa.com for an easy way to figure our the numbers.
  • If you have more than one IRA the RMD must be calculated for each IRA but the distribution can be taken from any or all of the different IRAs. In other words you could calculate your RMD for 5 different IRAs, but only take the distribution out of one of them.
  • Distributions required for an employer plan like a 401(k) cannot be satisfied by removing money from an IRA and vice versa.
  • If you don't make the RMD, the IRS may levy a 50% penalty based on what was supposed to be taken out. 

Hope that helps. Give us a call.

 

JJ

 

 

 

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