Missed RMD & potential liquidation of smaller ira
RMD wasn’t taken for 2022-24. Was taken in 2025. Will I be require to pull out back rmd (combined with this yr +/-$40k). Additionally, there is a different IRA of $40k I want to use to pay 1/2 the house off. It’s currently losing $. For other reasons it has to be now or never & if not the $203/m rmd can’t be used to pay down the home. Annual income is +/- $79k. I know I’d potentially be doubling my tax base for a year but I feel like if it’s losing $ + rmd + mortg interest it’d be worth it. 83yo
Quick Answer:
Regarding the missed RMDs (2022–2024): Yes, you are legally required to withdraw the missed amounts immediately. You must also file **IRS Form 5329** for each missed year to report the shortfall. While the SECURE 2.0 Act reduced the penalty to 25% (or 10% if corrected timely), you can request a waiver of this penalty due to "reasonable error" if you have now taken the distributions.
Regarding the $40,000 lump sum: With an annual income of $79,000, adding $40,000 (plus the ~$40,000 in back RMDs) will likely push a significant portion of your income into the **22% or 24% federal tax bracket**. Additionally, this spike in Modified Adjusted Gross Income (MAGI) will likely trigger **IRMAA surcharges** on your Medicare Part B and D premiums two years from now.
While "losing money" in the account doesn't provide a tax deduction (unless it's a total loss of basis in a non-deductible IRA), using the funds to pay down a mortgage is a personal cash-flow decision. However, from a strictly tax-efficiency standpoint, doubling your taxable income in a single year is costly. Consult a professional to run a formal tax projection before proceeding.
Note: This answer is provided for convenience only. It is important that you speak to a CPA about your individual tax situation.
