Rmds And Ewps, It's A Minefield Out There

Bozo
Bozo   |     |   1,328 posts since 2011

I previously posted on the confusion among bankers as to the various provisions regarding the waiver of the EWP for RMDs from IRA CDs. Well, friends and neighbors, today was classic. I called my bank with what was (I thought) a fairly straightforward question. Your T+C provides that the EWP will be waived for any RMD from an IRA CD. I explained, slowly and succinctly, that I wanted to satisfy my 2018 RMD from the IRA CD I would be transferring into the bank. I emphasized my TOTAL RMD, not just that portion (3.77%) attributable to the bank's IRA CD. No problem, I was told. I reiterated, just to make clear, that the amount would be roughly half of the CD. Would that still qualify for the waiver? Sure, I was told. I said I would take the other half out in 2019 as my 2019 RMD.

So, I motor on over to the bank, and met with the branch manager. I explained what I was told by her colleague (who was sitting a few feet away), and got that "deer in the headlights" look. To make a long story short, he was wrong and she didn't have a clue. She called the home office's IRA Department. If, and only if, all your IRA CDs were already with the bank would you be able to take your annual percentage from one IRA CD. Of course, that was also assuming you had no IRAs other than IRA CDs with that bank. Grrr.

Solution: I'm still moving the money (into a MMA). Half the MMA will be liquidated shortly after the money hits, the second half will be plopped into a 13-mo IRA CD. I'll take that out in 2019.

Lesson Learned: This was what should have been a fairly simple question, and a fairly simple transaction. I was there in person. I can only assume the anguish had I tried to do it long-distance.

Suggestion: For those DA readers hitting RMDs, make sure you get everyone (including the IRA Department in the home office) to "sign off" on what you want. It's a minefield.




cumulus
cumulus   |     |   1,067 posts since 2010
Bozo's wise, Bozo' sage,
Expert comments: Taxes, RMD's & IRA's,

Bet he uses Burma Shave!

c.f. //http://burma-shave.org/jingles/
Bozo
Bozo   |     |   1,328 posts since 2011
What with RMDs and such,
My finances in a clutch,
I can only scrimp and save,
To buy that can of Burma Shave.

In the poorhouse I might go,
But I will never tarry,
Shaving kit will always fit,
In my on-board carry.

Burma Shave
Ally6770
Ally6770   |     |   2,721 posts since 2010
I have gotten a letter mailed to me with their rules stated on the bottom of my letter asking if I can take out all of the required RMD for ALL of the IRA's even at other institutions from the CD at their institution with no fees or penalties of any kind. I have taken the RMD out of a different institution practically every year since I started with my husband's in 2011. No problems, no fees or penalties. I always take it out on the 20th of Dec. along with the conversion on that day also. I can go on line to make sure it is done on that day. It shows immediately when it is done. I also get a confirmation that they have received the. papers for my request that I send them. I mark it on my calendar each time so that in my old age I will not forget.
Bozo
Bozo   |     |   1,328 posts since 2011
Ally 6770:

Get a letter, send a letter,
Were it not, so much better,
To explain, or thus complain,
Frustration so much pain.

Burma Shave
Bozo
Bozo   |     |   1,328 posts since 2011
Putting my serious cap back on, managing your retirement funds while actually "in retirement" can be difficult. As I joked with my banker last Friday, managing money in retirement is hard.

Aside from the obvious issues, such as asset allocation and risk tolerance, one faces the rather pedestrian issues of RMDs. The IRS allows a person to satisfy his or her RMD from one or any number of IRA accounts. Sounds simple, right? In practice, it's not. Let's say you want to satisfy your entire RMD from one low-yielding IRA CD which ostensibly waives EWPs for RMDs. Review my prior posts for the minefield you might encounter.

OK, Plan B. The IRS really doesn't care if your RMD is styled as such. Any "normal distribution" will suffice. Enter PenFed and StateFarmBank (and Patelco and NWFCU). PenFed and StateFarmBank are clear. Folks over 59 1/2 may make a partial withdrawal from an IRA CD with no EWP. That "normal distribution" counts toward your RMD.

Moving along, if you don't have enough in an institution which allows RMD withdrawals of whatever limit with no EWP, you need to plan ahead. Perhaps way ahead.

Once I was a bit unwary,
Getting old was just too scary,
RMDs brought home the truth,
I was getting long in tooth.

Burma Shave
Ally6770
Ally6770   |     |   2,721 posts since 2010
Unless Pen Fed has changed their rules you had to leave $1,000 in the CD when taking out a RMD.
Bozo
Bozo   |     |   1,328 posts since 2011
That's their definition of "partial withdrawal".
Ally6770
Ally6770   |     |   2,721 posts since 2010
I could take the full withdrawal out of 2 CD's as long as I left $1,000 in the lowest interest which was also the smallest CD at that time. In the following year we could take out the $1,000 if we wanted which would have been a much smaller penalty and leave more in the higher paying CD or go elsewhere for the rest.
Bozo
Bozo   |     |   1,328 posts since 2011
Ally6770, the nice thing about "partial withdrawals" is that the $1000 one must leave in the CD (even if at a sub-par rate) is hardly retirement-threatening. I figured out some time ago that the PenFed and StateFarmBank perquisites were proxies for high-yield savings accounts. For example: find me a totally-liquid IRA savings account yielding over 2%. In effect, the IRA CDs with no EWP for partials are just that. While there's a certain time-lag between the time you submit the form for the normal distribution and the time you receive the check, it's not a huge issue.
EarthVisitor007
EarthVisitor007   |     |   29 posts since 2019
I run into situations that sometimes I know more about the rules, options, policies, etc. than the CSR I am working with at the time. Especially, if the CSR is a new hire. So I generally explain it to them and have them check with a supervisor. I call this customer training.
lou
lou   |     |   774 posts since 2010
I think a bill just passed in the House which would raise the age to take minimum distributions to 72.

Bozo, what's the name of the bank to which you referred in your post?
Anon456
Anon456   |     |   222 posts since 2011
I agree, it can be complex and you MUST cover your own backside.

I do all the money issues for our household, but my wife will inherit a sizeable IRA. I told her the good news, bad news the other day:

1) Goode News - Given our assets, when I go, you will NEVER have to worry about money
2) Bad News - If you have money, then You will always have to worry about money ( it's a jungle out there )

You either have to be on top of things, or pay someone to do that, and HOPE they really are ..... hard to do it all well.  Saving, Investing, Taxes and Tax Law, protection of assets, and estate planning.  Good problem to have, but a problem never-less.


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