I cannot claim to have expertise, but I have the same understanding you do. IRAs inherited prior to Secure Act use the beneficiary’s age on the Uniform Lifetime Table[.]
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You raised something that kind of happened to me. In November, for the first time, we did a Roth conversion. We just did our taxes last week and was surprised to get a notice saying that we might get penalized for not paying quarterly taxes. We didn’t do the conversion until November and didn’t even know at the beginning of the year that we’d be doing one. Will I really get penalized? If it matters, dh also has some taxes taken out via W-2s.
This year we definitely will do quarterly taxes as we know we’ll do a conversion again.
We also did a Roth conversion in December. Even though I wanted the full amount IN the Roth, taxes were taken out of it, and I guess I’m glad.
This year, I will have a small increase to my IRA distributions to meet my RMD. I will have that done in December with taxes taken out (it’s only a few thousand dollars more distribution as I’m already taking distributions from some of my IRAs).
We meet with the financial planner in May to get this done, and also charitable contributions from one of the IRAs.
I cannot remember the form #, but there is a form, both for the Feds & at least CT, that allows you to report income monthly/quarterly. It’s not exactly quarterly, but close enough for this discussion. IIRC, you fill in your taxable earnings as they occurred, thereby reducing any penalty. Without that info, the IRS assumes you converted earlier in the year.
I was tripped up by this many years ago when a significant payment arrived Dec 28th. Since it has been so long since I dealt with this, I am not 100% confident of my response.
I pulled my old return and cannot find the Fed form. To be honest, that was my first year filing my own taxes so I had a bit of a learning curve with TurboTax. I think the reason I was only tripped up by the state was that the Fed return included the dates of the capital gains distribution but CT’s form has very few inputs and I didn’t know to fill out the Schedule where you report timing of receipts. Sorry I cannot be of more help but maybe try Intuit question pages. Some of those responses are useful.
Hopefully this is not too rude a question, but don’t you have to be 70.5 in order to make QCDs?
I am. I am required to do RMD in 2024 (see my post above). So clearly, I was old enough for those charitable contributions in 2023.
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Ah, I was confused with all the discussion of inherited IRAs.
I’ll look into that. Thanks. Dh did the taxes and he was prompted to fill out some form, but I don’t think he did.
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I edited my response while you were typing.
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Thanks so much for noting this! Husband and I both turn 73 this year so have been discussing how much of our initial RMD to take this year and how much to postpone on the one time deal until next year (along with next year’s full RMD’s). This (and the charitable contributions directly from IRA deal) will both come into play in our decisions. This will be great to do on an ongoing basis.
We’ll have to see how it works with CA estimated taxes, although that’s a much lower amount.
On another note, I’ve been getting RMD’s from my inherited IRA from my mother since 2015. I set up for an annual payment at the end of March in case we wanted extra funds for taxes. I understand it’s over my lifetime and based on my algorithms.
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@CT1417 - thank you, that is very helpful.
I’ve never had any of my “own” money of any significance to worry about. Compared to most on this thread, I think I might be the working poor.
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@Marilyn please explain this one year postponement of RMD. I was 73 yesterday. Didn’t know that was an option.
@Thumper, I think this was discussed upthread. You’re allowed to postpone your initial RMD until April 1 of the following year. You still have to take the full RMD for the following year. So you could take two RMD’s the following year, or divide the initial RMD however you like.
When must I receive my required minimum distribution from my IRA? (updated March 14, 2023)
You must take your first required minimum distribution for the year in which you reach age 72 (73 if you reach age 72 after Dec. 31, 2022). However, you can delay taking the first RMD until April 1 of the following year. If you reach age 72 in 2022, you must take your first RMD by April 1, 2023, and the second RMD by Dec. 31, 2023. If you reach age 72 in 2023, your first RMD for 2024 (the year you reach 73) is due by April 1, 2025.
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And just want to add that College Confidential has become an excellent financial and tax consultant! Maybe they should look into monetizing that aspect 
.
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You just need to keep an eye on the Safe Harbor calculation. If you know that your RMD will allow you to stay within Safe Harbor, then push the distribution as late in the year as possible.
Just give yourself a few business days before the last business day of December to sell whatever the holdings are as you need cash for the RMD, or at least Schwab does.
Safe Harbor becomes a whole new ball game with the RMD’s. I’ve been pretty good at 90% of presumed tax burden, and when the previous year is below average, 100% of that. For 2024 we can use 100% of 2023. But the RMD’s push us into a higher marginal tax rate bracket so boo.
Please explain Safe Harbor.
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That just means you’ve withheld/paid estimated taxes enough to avoid a penalty for underpayment.
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Tacking onto Marilyn’s response:
What is the safe harbor tax rule?
In general, a “safe harbor” is a provision that protects from penalties when certain conditions are met. When it comes to the estimated payment of taxes, you may owe the penalty for underpayment unless you adhere to these “safe harbor” provisions outlined by the IRS:
- if it turns out you owe less than $1,000 in tax for the current year after subtracting your withholdings and credits
- if you pay at least 90% of the tax obligation for the current year
- if you pay an amount equal to 100% (if your adjusted gross income for the year is over $150,000 then you’ll need to pay 110%) of your taxes for the prior year
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