I’m 73 and starting RMDs with a $53,000 withdrawal. When will I have to pay

Dear Fix My Portfolio, 

I will be turning 73 this year and will have to take out around $53,000 from my retirement accounts for an RMD. This will add about $5,000 to my tax bill for 2024. If I take the full $53,000 out today, will I have to pay the Internal Revenue Service quarterly estimated taxes of $1,250 each during tax year 2024? But if I wait until December 2024 to take out the full $53,000 will I just have to pay the $5,000 tax when filing my 2024 taxes in April 2025? I can’t seem to find the answer to this so any help would be greatly appreciated,


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Dear Dave, 

Welcome to the wild world of required minimum distributions. Happy birthday, and many happy tax returns. 

For some people, this is a land of rainbows and unicorns, where they happily spend the money they saved while they were working and do as they please. For others, it’s just an enormous tax headache and somewhat of an intrusion to be forced to withdraw money you may not need for living expenses, in order to finally give the government its share after years of tax-free growth. 

I can’t exactly tell from your letter which camp you are in, but I’m getting a little hint of frustration about the decisions involved and how hard it is to find the information you need. 

There’s some good news for you, though, in that this one isn’t as hard to figure out as it might seem at first glance (but it’s not exactly straightforward either). 

Calculating your required amount to withdraw

The easy part is that the amount you are required to withdraw is a knowable quantity and won’t change no matter when or how you take the RMD. It is based on the balance of your tax-deferred accounts as of Dec. 31 of the prior year. So if that balance was $1.5 million at the end of 2023, you’d apply the IRS formula that is relevant for your case, and come up with some number close to $55,000 that you must withdraw, as you have done. Take it now, take it monthly, take it at the end of the year: There are pluses and minuses to each strategy. The only bad way is to forget to take it altogether because then you may owe stiff penalties. 

Another potential plus: When you’re just turning 73, your first RMD is not due until April 1 of the following year. So you might have more time than you considered, but you can take it whenever you wish. Most people need their retirement funds for living expenses and take out what they need when they need it, often in excess of the required amount, or they find other ways to spend the money like gifts to family or charity

The taxes due are a little more involved, because people are complicated and every tax situation is different. It’s easy to say something like…

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