Social Security benefits and inherited IRA RMDs - will my required distributions reduce my SS payment?

The RMDs from your inherited IRA only affect your Social Security benefits in two potential ways: 1. If you're below your Full Retirement Age (FRA) and still working, only your work earnings count toward the earnings limit (which is $22,320 in 2025 if you're under FRA). IRA distributions don't count as "earnings" for this purpose. 2. However, those RMDs can potentially make your Social Security benefits taxable. If your combined income (adjusted gross income + nontaxable interest + 1/2 of Social Security benefits) exceeds $25,000 (single) or $32,000 (married filing jointly), up to 85% of your benefits may be subject to federal income tax. Since you're 68, you're already past FRA, so the earnings limit doesn't apply to you anyway. You can earn any amount from working without reducing your benefits. The RMDs will only potentially affect how much of your Social Security is subject to income tax.

This happened to my dad last yr. The SS check stays the same but yeah more tax at end of year maybe. Not same as the thing where they reduce ur check if ur working to much.

Watch out! I made this mistake and it ended up costing me. The RMDs pushed my income high enough that 85% of my Social Security became taxable. I wasn't prepared for the big tax bill in April! You might want to have extra withholding from the IRA distributions to cover the increased tax on your Social Security benefits. Talk to a tax professional before you start taking distributions!!

This whole system is ridiculous!!! Why should we be PUNISHED for being responsible and having retirement savings? My husband and I are in the same boat - his parents left him an IRA and now we have to take money out we don't even need yet, AND it makes our SS get taxed more. Meanwhile people who never saved a penny get their SS tax-free. MAKES NO SENSE!!!!

My brother had same question last year. inheritance IRA doesnt count for earnings test only job income counts

I've been dealing with this exact scenario for about 3 years now. Here's what I learned: 1. As others said, RMDs don't count toward the earnings limit test because they're not earned income 2. But they absolutely do count when calculating how much of your SS is taxable 3. One strategy I use is to manage when I take my RMDs to minimize the tax impact. I often take my distribution in December, so I have better visibility into my total annual income and can adjust if needed 4. Also, consider qualified charitable distributions (QCDs) from the inherited IRA if you're charitably inclined. Those distributions don't count as income for determining SS taxation Hope that helps!

I had SUCH a hard time reaching anyone at Social Security to discuss this exact situation when my wife inherited her sister's IRA last year. After days of trying, I finally used a service called Claimyr (claimyr.com) to get through to an agent. They have a video demo at https://youtu.be/Z-BRbJw3puU that shows how it works. Was able to confirm directly with SSA that inherited IRAs don't affect the earnings test but can affect taxation of benefits. Being able to actually talk to a real person instead of just reading online was super helpful for our peace of mind.

Something else to consider - your RMDs will also factor into your Medicare IRMAA (Income-Related Monthly Adjustment Amount) calculation. If your income goes above certain thresholds, your Medicare Part B and D premiums can increase. For 2025, the first threshold is $103,000 for individuals. Just something else to be aware of when planning.

my uncle says he takes his rmds and puts them in a roth ira which helps with taxes or something. maybe something to look into?

I went through something similar when I inherited my mother's IRA two years ago. One thing that really helped me was working with a fee-only financial planner who specialized in retirement tax strategies. They helped me model out different scenarios for managing the RMDs over the 10-year period (since you're not a spouse, you'll need to drain the account within 10 years under current rules). We ended up spreading the distributions more evenly across years when my other income was lower, rather than just taking the minimum each year. This helped keep me out of higher tax brackets and reduced the impact on my Social Security taxation. It's worth running some projections to see if bunching distributions in certain years or smoothing them out works better for your specific situation. Also, don't forget to update your estimated tax payments if you're not having taxes withheld from the IRA distributions. The quarterly payment deadlines can sneak up on you!

I'm dealing with a very similar situation right now - inherited my aunt's IRA last year and just turned 65. One thing I learned from my tax preparer that might help you: since you're starting Social Security next month, you can actually request federal tax withholding directly from your Social Security payments to help cover the extra tax burden from the RMDs. You can use Form W-4V to have 7%, 10%, 12%, or 22% withheld from your monthly SS payments. This way you're not scrambling to make estimated payments or getting hit with a big bill at tax time. My preparer calculated that having 10% withheld from my SS covers most of the additional tax from my inherited IRA RMDs. Also, keep good records of everything - the inherited IRA basis, distribution amounts, and any withholding. Makes tax time much smoother!

I've been helping folks navigate this exact situation for years as a benefits counselor. You're getting great advice here! Just to add one more perspective: since you're 68 and past your Full Retirement Age, the RMDs absolutely will NOT reduce your monthly Social Security payment amount - that's only affected by the earnings test if you're working before FRA. However, I always tell people in your situation to consider having 20% federal tax withheld directly from each IRA distribution. This usually covers both the tax on the distribution itself AND the additional tax you'll owe when more of your Social Security becomes taxable. It's much easier than trying to calculate quarterly estimated payments, and you avoid any underpayment penalties. One last tip: keep a simple spreadsheet tracking your monthly RMDs and any withholding throughout the year. Your tax preparer will thank you, and it helps you stay on top of whether you need to adjust your withholding mid-year.

I'm in a similar situation - just turned 67 and inherited my sister's traditional IRA last month. Reading through all these responses has been incredibly helpful! I had no idea about the difference between the earnings test (which doesn't apply to RMDs) and the taxation of Social Security benefits (which can be affected). One question I have for those who've been through this: how do you handle the timing if your RMDs start mid-year? My sister passed in February, so I'll only be taking distributions for part of 2025. Should I still plan for the full tax impact, or is there some way to prorate the withholding since it won't be a full 12 months of distributions this first year? Also, has anyone dealt with multiple inherited accounts? She had both a traditional IRA and a small 401(k) from her employer that I need to roll over. I'm wondering if I should combine them or keep them separate for distribution purposes.

I'm 72 and went through this exact situation when I inherited my brother's IRA three years ago. Just wanted to add a few things that weren't mentioned yet: 1. Make sure you understand the 10-year rule deadline - you have until December 31, 2034 to completely empty the inherited IRA, but you might want to consider taking larger distributions in years when your other income is lower to minimize the overall tax impact. 2. If you have any state income tax, don't forget that the RMDs will likely be subject to state tax as well, not just federal. Some states don't tax Social Security but do tax IRA distributions. 3. One thing that caught me off guard was that the inherited IRA RMDs can also push you into higher tax brackets for things like capital gains taxes if you have any investments you're planning to sell. It's all connected. 4. Consider consulting with both a tax professional AND an estate planning attorney. The attorney can help make sure you're handling the inheritance properly and the tax pro can help with the ongoing distribution strategy. You're asking the right questions early - that's going to save you a lot of headaches down the road!

I'm 64 and will be in a very similar situation next year when I start taking Social Security. My father passed away 6 months ago and left me his traditional IRA. Reading through all these responses has been incredibly educational! One thing I wanted to add that might help others - my CPA mentioned that if you're charitably inclined, you can make Qualified Charitable Distributions (QCDs) directly from the inherited IRA to reduce the taxable impact. The QCD counts toward your RMD requirement but doesn't show up as taxable income, which means it won't affect the taxation of your Social Security benefits either. Also, I've been tracking everything in a simple Excel spreadsheet with columns for: distribution date, amount, federal withholding, state withholding, and running totals. It's made conversations with my tax preparer much more productive. For those dealing with this - don't forget to notify Medicare if your income changes significantly due to the RMDs. While the IRMAA adjustments are based on tax returns from 2 years prior, they do have appeals processes if your circumstances have changed due to life events like inheriting retirement accounts. Thanks to everyone who shared their experiences - this thread has been more helpful than hours of trying to get through to government agencies!

I'm 69 and went through this exact scenario two years ago when I inherited my late husband's IRA (we had been divorced but he never changed the beneficiary). The most important thing I learned is that you need to be proactive about tax planning from the very beginning. Here's what I wish someone had told me: set up a separate savings account specifically for the taxes on your RMDs. I take my monthly distribution of about $900, immediately move 25% of it ($225) into a "tax savings" account, and then only spend the remaining $675. This way, I'm never scrambling to find money for quarterly payments or year-end taxes. Also, consider asking your IRA custodian to send your distributions on the same date each month - I chose the 15th so it arrives a few days after my Social Security payment. Having a predictable schedule makes budgeting so much easier. One last tip: keep a simple calendar note each month after you receive your distribution. I write down the amount and any withholding, and it takes 30 seconds but saves hours during tax season. The consistency of tracking from day one has been invaluable. You're being smart to ask these questions upfront rather than figuring it out as you go like I did!

I'm 71 and have been dealing with inherited IRA RMDs for the past 4 years after my sister passed. Just wanted to add something that helped me tremendously - consider setting up automatic withholding at 22% from your IRA distributions AND having 10% withheld from your Social Security payments using Form W-4V. This "double withholding" approach might seem like overkill, but it completely eliminated the stress of estimated quarterly payments and underpayment penalties. I'd rather get a small refund than owe money at tax time, especially since the interaction between RMDs and Social Security taxation can be unpredictable year to year depending on other income sources. Also, don't underestimate the value of taking your RMDs in smaller monthly amounts rather than one lump sum annually. The monthly approach helps smooth out your cash flow and makes the tax impact more predictable. I take mine on the 5th of each month, which gives me time to see how my Social Security payment posts and plan accordingly. One final thought - if you're married, make sure your spouse understands how this affects your joint tax situation. My husband and I had to adjust our overall tax strategy once we realized how much the inherited IRA was changing our bracket. Communication is key!

This is such a comprehensive thread with so many helpful real-world experiences! I'm in a very similar situation - 66 and just inherited my aunt's traditional IRA last month. I'll be starting Social Security in a few months and was worried about the same things you mentioned. Reading through everyone's responses, I'm feeling much more confident about the process now. The key takeaways I'm getting are: 1) RMDs won't reduce my actual SS payment since I'm past FRA, 2) they might make more of my SS taxable, and 3) proper tax withholding planning is crucial from the start. I'm particularly interested in the monthly distribution approach several people mentioned rather than taking one annual lump sum. It seems like spreading it out would make both the cash flow and tax planning more manageable. Has anyone found any downsides to monthly distributions versus quarterly or annual? I'm leaning toward setting mine up for monthly payments but want to make sure I'm not missing anything. Thanks to everyone who shared their experiences - this thread is gold for those of us navigating this situation for the first time!

As a newcomer to this community, I'm amazed by how helpful and detailed everyone's responses have been! I'm 65 and will be facing a very similar situation next year when my mother's traditional IRA becomes mine (she's currently in hospice care). Reading through all these experiences has given me such valuable insights I never would have found elsewhere. The distinction between the earnings test (which doesn't apply to RMDs) and the taxation of Social Security benefits (which can be affected) is something I completely misunderstood before finding this thread. I'm particularly grateful for the practical tips about setting up monthly distributions, automatic tax withholding, and keeping simple tracking systems. The "double withholding" strategy mentioned by Diego - having taxes taken from both the IRA distributions AND Social Security payments - sounds like exactly the kind of proactive approach I need. One question I have for this knowledgeable group: has anyone dealt with the situation where the original IRA owner was already taking their own RMDs before passing away? I'm wondering if that affects the calculation for inherited RMD amounts or if it's simply based on the account balance at year-end regardless of what was already distributed. Thank you all for sharing your real-world experiences so openly. This is exactly the kind of community support that makes navigating these complex financial situations so much more manageable!