Given President Trump and Elon Musk’s activities to date, how does one estimate the impact on one’s IRA?
My life expectancy factor will be 19.4 giving me a significant increase in taxable income. However, I’m having difficulty in determining how much my IRA will increase or decrease in value by the end of the year. My IRA is roughly 85% invested in equities, 11% bonds, and the remainder in cash.
I am leaning toward using TurboTax’s preliminary estimate instead of making adjustments to their recommendation.
You 2025 RMD is determined by the value of your IRA on 12/31/2024 and your taxes depend on your total income.
You also have an obligation to pay any taxes due quarterly. So you can delay those taxes on your withdraw by delaying the withdraw until Q4 of 2025.
There are penalties for non tax payment and for not taking your RMD.
Personally I do not believe in market timing, so I keep my Equity/Bond/Cash ratios long term. To me the words “long term” mean generally changes are small – less than 1% moves between categories and moves rarely happening less than 5 years apart. The last time I made a change in my equity/bond/cash ratio was 18 months before I started RMDs — 13 years ago.
What changes are you seeing that will impact IRAs?
I’m confused. If your life expectancy factor for 2025 is 19.4, that means that your life expectancy factor for 2024 would have been 20.2
That’s a 5.15% RMD for 2025 vs. 2024’s 4.95% RMD. That doesn’t seem like a significant increase, unless your Dec 31, 2024 balance was significantly higher than your Dec 31, 2023 balance was.
RMDs for 2025 are based on the balance in your account as of Dec 31, 2024. The balance as of Dec 31, 2025 will be used to calculate your 2026 RMDs. At this point, it doesn’t matter what your Dec 31, 2025 balance will be - you just need to take your 2025 RMDs based on taking 5.15% of your Dec 31, 2024 balance.
Preliminary estimate for what? Are you trying to make estimated quarterly tax payments for 2025? You already know what your 2025 RMD will be. As long as you have an idea of what any other income should be, you should easily be able to estimate what your 2025 taxable income will be. If you are concerned about the tax law changing, just be sure you meet a safe harbor.
Preliminary estimate for what? Are you trying to make estimated quarterly tax payments for 2025? You already know what your 2025 RMD will be. As long as you have an idea of what any other income should be, you should easily be able to estimate what your 2025 taxable income will be.
My apologie to all for my post. I’ve been in the hospital for the last 61 days and became confused when I returned to preparing my 2024 tax returns. I was attempting to figure out my estimated taxes for the 2025 tax year and was trying to figure out what my income would be on 31 DEC 2025. As you point out that is only meaningful for the 2026 tax year.