ira rmd

mikey49
mikey49 Member Posts: 2 Newcomer
in Retirement Income

how to reduce the tax impact of ira rmd's?

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Answers

  • KristineS
    KristineS FreeTaxUSA Agent Posts: 177

    Hi mikey49,

    That's a great question! Thanks for writing in to our Community.

    The tax impact of a Required Minimum Distribution (RMD) depends on a number of factors, including other income, your filing status, and even your age.

    Without all the details, here are four options:

    1. Take out the minimum RMD 
    2. If you have multiple IRAs, take the RMD out of one IRA. 
    3. If you missed an RMD, take it out as soon as possible. Apply for an exception when you file your taxes for 2024. 
    4. Consider a QCD if age 70 1/2 or older.

    A QCD, or Qualified Charitable Distribution, is a tax free distribution via a trustee to trustee transfer from your financial institution to a qualified charitable organization/non-profit. With a QCD, you won't take possession of the money, it moves straight from your IRA to the organization. The current limit you can exclude for taxes is up to $105,000. If married, and each spouse has an IRA, up to $210,000 can be donated.

    Careful planning with a licensed professional might show some tax savings with a Roth Conversion or the purchase of an annuity.

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  • mikey49
    mikey49 Member Posts: 2 Newcomer
    edited December 20

    I am a Florida resident with about 85k in income from pensions and ss. have noticed each yr, rmd's impact my taxable income and besides charity donations which unlike tax credits is deductible, I'm looking for other possible ways to minimize its impact.

    btw, thanks for the response. was well done.

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