Q. I will be 72 years old in March, so 2022 will be the first year to be subject to the withdrawal requirements. I have two 401 (k). One is from the current employer and the other is from the previous employer. There are also two IRAs and one Roth IRA. I need to know how to calculate the required amount, can I get it from one account? — — Melbourne Beach Sid
A. Sid, it’s always good to think ahead. Roth IRAs are not subject to a mandatory minimum allocation (RMD), so you don’t have to worry about that account.
The minimum allocation (RMD) for all types of accounts covered by RMD is calculated individually for each account and must be obtained from that account unless exceptions apply. There is one exception that certainly applies to you and a second that may help. You will reach them soon.
The 2022 RMD is calculated by taking the account balance for December 31, 2021 and dividing it by the coefficients in the IRS table. If you are single or married to someone under the age of 10 (may be older than you), a uniform life listing the 72-year-old factor in Table III, 27.4 of 2022. Please use the table. If your spouse is 10 years or older than you, use the coefficients in Table II “Life Expectancy of Joint and Last Survivors” in 2022.
Therefore, assuming you are using a Uniform Table, you need to divide the balance of each account as of December 31, 2021 by 27.4 and get its RMD from each of those accounts. For example, if your old 401 (k) is worth $ 100,000 on December 31, 2021, you must get $ 3,650 from that account by the 2022 RMD deadline to meet the 2022 RMD requirements.
The first RMD (2022) will be available by April 1, 2023. Only this first RMD in 2022 can be postponed to the next year. The second RMD will be in 2023 and will expire by December 31, 2023. The 2024 RMD must be completed by December 31, 2024 each year for the rest of your life.
Your question:Can I deduct all charitable donations?
If you do not get the first RMD in 2022 and postpone it to the spring of 2023, you will get two RMDs in 2023 and report income from both in 2023 returns. It can be good or bad. If the 2022 marginal tax rate is lower than 2023, it is probably unwise to delay it. If the marginal tax rate in 2023 is lower than in 2022, you can save some money by delaying it.
Well, I said I saw two exceptions to consider. It definitely applies to you and is the most commonly used exception. An IRA RMD can be obtained from that IRA or other IRA account, or any combination of IRA accounts, including traditional IRA, SEP-IRA, SIMPLE-IRA, and SAR-SEPIRA.
The second exception that may apply is to the current employer’s 401 (k). If you have a wording that corresponds to your 401 (k) plan, you don’t own more than 5% of your company, and you continue to work for that company, you may be able to skip the RMD from that 401 (k). .. Account until the year you retire. To find out if your plan has that provision, contact your benefits department or summary plan description.
If you have these provisions, also check if your plan accepts rollovers. If you roll an IRA and roll in your former employer’s 401 (k) balance to your current employer’s 401 (k) by December 31, 2021, these funds will be eligible for current exemption. Because it is included in the plan, it is not subject to RMD. participant.
RMD exists to force the exclusion of money from the severance pay system so that those funds can be taxed. In a future column, I’ll discuss some other ways to reduce your tax obligations.
Dan Moisand of CFP® is a former national president of the Financial Planning Association and has been featured by at least 10 financial planning publications as one of the top financial planners in the United States. He can be contacted at www.moisandfitzgerald.com or 321-253-5400.
You are at that minimum distribution age: where do you start?
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