Can a retiree do this by making a distribution from an IRA or a 401k in the years before an RMD is required? The idea, would be to have no withholding from Social Security checks and pension checks and just make one distribution from the IRA at the end of the year with 100% withholding to cover the years taxes? Also, what is the safe harbor?
Yes.
What matters is that the taxes are paid through *withholding*, not where the withholding came from.
It could be from RMDs, regular withdrawals from tax-deferred accounts, or making W-2 withholding (or even SS withholding) "enough" to incude ALL of the taxes due.
One reason why there is a lot of discussion about using RMDs is that many people do not want to remove money from tax-deferred accounts until it is required. Thus, they wouldn't want to do pre-RMD removals and withholding. But once RMDs are required, why not use that for withholding taxes!?
RM
Statistics: Posted by ResearchMed — Mon Mar 18, 2024 8:01 pm — Replies 19 — Views 990