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If you don't need your 2020 RMD, or don't need all of it to live on, letting it remain in your IRA lets it grow tax deferred longer. Markets took a hit during this pandemic, so you stand a better chance of recovering if more cash remains invested longer this year. Also, as you say, if your IRS withdrawals make more of your SS taxable or put some income in a higher tax bracket, you might want to control how much, if any, you withdraw. Depending on your investments, this might not be a good time to sell to take withdrawals. If this is a low income year for you, and you don't need your full RMD for living expenses, it might be a good time to convert some of your Traditional IRA to a Roth IRA.

If you expect to be in a higher bracket or expect to need less to live on in 2021 compared to 2020, then you might want to take your RMD, or a larger portion of it, this year. As with anything tax, the answer is It Depends!

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Illmas, you are not delaying your RMD, you don't have to take it all.  Theoretically, that allows the money in the account to continue to grow tax free.  Of course, it can also lose, and with this frothy market that isn't trading on fundamentals, who knows?  I agree with Lion that if you don't need the money, this is a good year to convert what would have been your RMD to a Roth.  Then you won't have to guess about what future tax rates will be and can take the money out when you need it, not because it's required.

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great reasoning - I copied and pasted (sp?) to my client to tell her financial adviser as she transferred her Trad to Roth and paid big $$ in tax.. and they are only 66!!

I said wait!!

You all are so knowledgable and able to communicate that in the written word!



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I have clients that did what yours did -- convert to a Roth and pay the taxes. They're doing it as part of their whole estate plans. They don't expect to use all their various savings during their lifetimes and have the money to pay the taxes now. They're setting it up so their kids don't have to sell something immediately to pay the taxes when they inherit.

And, I have clients that were between jobs or transitioning into retirement with part-time employment, so were in a lower tax bracket than they'd been in years. They converted enough to a Roth each year to not go above the 24% bracket (one was able to stay in the 12%) while they were unemployed or underemployed before getting a new job or drawing on their pensions/SS and raising their bracket again.

Facts and circumstances.

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