Props to Ed Slott, Jeffrey Levine, and Bob Carlson. They sure do get the word out to the public with their RMD analysis. And, I’ll just say it, scare tactics.
Witness the blitz of books, blogs, and podcasts about the IRA Tax Bomb, the Minimum Distribution Monsoon, Withdrawal Flash Flood Warnings, and Estate Tax Explosive Diarrhea. The result is that many people who have no need to worry about these things are losing sleep over them.
Please, stop the madness!
Here is some context on how much RMDs actually may be:
There, now is that so bad? Sure, if you have other assets and don’t need this money to live, it can be annoying to be forced to remove the money and pay taxes on it.
But, quick reminder, you OWE the taxes. You have had a decades-long break in which you didn’t pay the taxes on the income or growth.
Speaking of taxes, how do these required withdrawal amounts fit into our current bracket structure?
RMD & Federal Income Tax Illustration
Thanks to ChatGPT for helping me put this table together.
My point, and I do have one, is that even with a $2million IRA and decent Social Security benefit, someone could remain in the 22% bracket.
True, this is a ROUGH set of calculations. It doesn’t account for other incomes the person might have. Even so, I hope today’s blog is starting to put RMDs into perspective.
Next up, what to do to reduce future RMDs.
