When taking money out of an IRA account

[iris lilies]

I know we have a couple of threads about RMD‘s, but I’m posting my thoughts here about my own RMD just to keep it on this thread where I can find it in the future.

ChatGPT has been extremely helpful in telling me exactly the month and year is my deadline for an RMD.

I now also understand QCD’s coming out of RMD’s on the amount removed from my IRA.

Isn’t that a mouthful of acronyms!

At first, I was a little depressed to read about how much money has to come out next year in an RMD. Ugh. But then I see that an amount of money I already donate, $10,000 a year, can be subtracted from that RMD and as usual, I pay no taxes on it, so I’m really only gonna have to pay taxes on $10,000 a year.

Of course, DH has an IRA that’s twice as big as mine so that’s going to be a big hit on our household income tax and also will inflate our income and may affect our Medicare bill.

Rats.

But maybe I can use that as a tool to get him to pay even more in charitable donations.

[nswef]

Iris, I finally got my husband to donate his RMD. He balked, but we had to go to extimated tax this year-4 times having to send in money, and that made him change his mind. His indecision was choosing the charities. I just had him do the same as mine, with the idea that we would talk about it later. Our community foundation has been recommended by our accountant to be a place to make a fund that does stuff. No idea how it works, so will need to make that appointment.

[iris lilies]

Iris, I finally got my husband to donate his RMD. He balked, but we had to go to extimated tax this year-4 times having to send in money, and that made him change his mind. His indecision was choosing the charities. I just had him do the same as mine, with the idea that we would talk about it later. Our community foundation has been recommended by our accountant to be a place to make a fund that does stuff. No idea how it works, so will need to make that appointment.

yes, this makes sense. If I didn’t already know individual charities here I would probably give to our community fund of Hermann. I know one of the board members, young energetic, competent. I will say that my library had more than a little trouble with the community fund organization in St. Louis so for that reason I probably wouldn’t donate to that group.

It is a little depressing to me to look at my IRA and realize 1/4 to 1/3 of it belongs to the gubmnet unless I take steps to mitigate that.

I do have a Roth IRA but not as much money in it.

[frugal-one]

yes, this makes sense. If I didn’t already know individual charities here I would probably give to our community fund of Hermann. I know one of the board members, young energetic, competent. I will say that my library had more than a little trouble with the community fund organization in St. Louis so for that reason I probably wouldn’t donate to that group.

It is a little depressing to me to look at my IRA and realize 1/4 to 1/3 of it belongs to the gubmnet unless I take steps to mitigate that.

I do have a Roth IRA but not as much money in it.

Other than charitable contributions, what are the options? Have to do RMD this year and it makes me ill. I need to go spend but hate shopping. I have a tendency just to make do…. which is stupid, I know.

[Tybee]

Frugal, why not just save the RMD, start a new brokerage account?

[iris lilies]

Frugal, why not just save the RMD, start a new brokerage account?

that is certainly one option and it’s likely we will be saving some of our RMD money, not sure exactly, but here’s the problem with that: placing it in yet another account that will earn interest (maybe) means that money, which has already been taxed is going to produce more money that will be taxed. That is just irritating to me on a theoretical level.

But there’s probably no getting around it, either it’s donated or goes on to to earn more income. Unless I put it in my mattress.

[Tybee]

What if you bought into something in the brokerage like a tax free municipal bond fund? Would that work?

[frugal-one]

Frugal, why not just save the RMD, start a new brokerage account?

We’ll see how the tax situation shakes out but for now we have no plans to spend. If I am reading correctly, our income for year has to be or exceed $218,000 (married couple) to increase Medicare. We do have plans for domestic travel and may take some other trips we have not considered previously? Also, charitable contributions will rise. We live WAY below our means so, like others here, in the “blow the dough” phase. Also, like others here, after being frugal for so long, it is difficult to change the mindset.

[frugal-one]

What if you bought into something in the brokerage like a tax free municipal bond fund? Would that work?

Checking low tax or tax free vehicles is something to check out. In the past, I found some to be quite risky or unstable. Need to spend more time investigating to be sure.

[Tybee]

Trips and charitable contributions sound really good!

I do know that when my mom was in memory care, the cost was all deductible which changed her tax situation a lot: "Memory care expenses generally qualify as medical deductions when:

• The individual is in the facility primarily for medical care, including supervision due to cognitive impairment.
  
• A doctor has certified that the person has a chronic illness and needs substantial supervision or assistance with daily living.
  
• You itemize deductions on your tax return.
  
• The expenses are not reimbursed by insurance.

Under these conditions, the entire cost — including meals and lodging — may be deductible because they are part of necessary medical care."