4. Loretta is a recently retired librarian and just turned 69 on March 13, 2018. When...

4. Loretta is a recently retired librarian and just turned 69 on March 13, 2018. When is Loretta required to take her RMDs? If Loretta is in the highest tax bracket, should she take her 1st RMD in December or extend it until April? Please explain your reasoning.

Expert Solution

Loretta is a recently retired librarian and just turned 69 on March 13, 2018. This means that she will attaining the age 70.5 years by September 13, 2019, which is the official age to take out the Required Minimum Distributions (RMDs). This means that she'll have the option to take out her all or part of her first RMD by the end of 2019, but she also has the option of waiting until April 1, 2020. (This option of three-month extension only applies to the first annual distribution.)

Loretta should take her 1st RMD in December 2019. Because she is in the highest tax bracket and if she did not take her 1st RMD in December 2019 and plans to extends it until April 2020 then she will have to take her second year’s RMD in the same calendar year as the first i.e. 2020. And if she took both the RMDs in the same calendar year then taking two RMDs in the same calendar year will increase her taxable income for that year.

ekkarill92 answered 2 years ago

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