Inherited IRA, when to take RMD this year?

[Gworker]

All this doom and gloom talk about the economy and the stock market has me thinking when should I take my RMD out of my inherited IRA?

I use the money for one good vacation every year and what's left over I save or use for a project on the house.

I know it's really market timing and no one knows what the market is going to do, but I'm thinking I should take the distribution soon. The account is way down as it is and my thinking is it's going to go lower. I was considering asking for the RMD now. I usually get it around March or April for a summer vacation.

So should sell now or wait? I figured I could put it in my ING account but I just looked at it and saw their interest rate is now 3.65%. Oh well at least I could get that instead of a losing some money.

 

[W2R]

All this doom and gloom talk about the economy and the stock market has me thinking when should I take my RMD out of my inherited IRA?

I use the money for one good vacation every year and what's left over I save or use for a project on the house.

I know it's really market timing and no one knows what the market is going to do, but I'm thinking I should take the distribution soon. The account is way down as it is and my thinking is it's going to go lower. I was considering asking for the RMD now. I usually get it around March or April for a summer vacation.

So should sell now or wait? I figured I could put it in my ING account but I just looked at it and saw their interest rate is now 3.65%. Oh well at least I could get that instead of a losing some money.

Journalists will write columns sayng whatever will catch their readers' interest. Just because you are reading doom and gloom, doesn't mean that is it likely to happen (or to not happen).

My own crystal ball is out of order, or I'd give you the "straight scoop" on the economy.

I'd probably wait, but I have no logical explanation as to why.

 

[kaneohe]

Interesting question for which I too have no crystal ball. Same issue I and others will face when having to take RMDs at 70.5. I'm thinking I need to asset allocate within the IRA itself so that I have a choice of picking from either stable assets or equity for the same reason why a down stock market can wreak havoc on your plan if you have to withdraw from equity alone.

 

[mickeyd]

I was considering asking for the RMD now. I usually get it around March or April for a summer vacation.

I think that you have already answered you own Q. BTW, it's almost Februray now, so what's the diff?

 

[Gworker]

I think that you have already answered you own Q. BTW, it's almost Februray now, so what's the diff?

From January 1, 2008, I'm down about $30,000. I know I can't fret about it but I'd hate for it to go down another $30,000. I just checked that figure and it helped me make up mind. I'll probably take it out more sooner than later and sock it away with ING. 3.6% is better than a loss.

 

[Moemg]

Not to change the subject but if you inherit an IRA at what age do you have to take distributions ? Thanks !

 

[Htown Harry]

Not to change the subject but if you inherit an IRA at what age do you have to take distributions ? Thanks !

It's more or less immediately. In my case, I inherited a share of a 403b from a parent in my early 40's. It was rolled into an inherited IRA in my name with the same firm.

The RMD on the account has grown over the past 6 years to about 2-1/2 % per year. Unlike the OP - who appears to be able to decide when during the year to take his RMD - mine is payable every December based on the previous January 1 balance.

From a planning perspective, it's a bit like I signed up for a 72t withdrawal, except I can't opt out after 5 yrs.

One difference from a 72t on a personal IRA, however, is that I can take out additional cash from the inherited IRA anytime I want, without a 10% early withdrawal penalty.

Whether via RMD or a one-time event, all distributions are taxed as ordinary income.

 

[lazygood4nothinbum]

Not to change the subject but if you inherit an IRA at what age do you have to take distributions ? Thanks !

i think it depends on the situation before inheritance. if you inherit an ira already subject to rmd by the ira's previous owner, then rmd's continue within either the same year you inherit or the following year (i think it is the following year but i forget now). if the ira was not previously subject to rmd's then i think you start rmd at the age when it would normally be required in your own lifetime. you should check me on that though as i hadn't studied it in a while.

 

[FinanceDude]

RMD's immediately start, but are based on YOUR (beneficiary's) life expectancy.

Basically, it has become a "stretch IRA", where you only have to take your RMD, but can take MORE without a penalty.

As far as taking it, I do it for my son's inherited IRA's on their birthdays, May and September. It is automatically sold out and transferred electronically to their custodial accounts.

You have awhile to decide, maybe wait for a rally before the election??

 

[Moemg]

Thanks for all the information . My daughter will inherit my IRA and I was wondering how that would be handled .

 

[FinanceDude]

Thanks for all the information . My daughter will inherit my IRA and I was wondering how that would be handled .

Make sure she is the benficiary and ALL the info on the assignment of beneficiary is correct.

Also, you should make sure you have contingent benies set up according to YOUR wishes, in case she pre-deceases either you or her children........

 

[mickeyd]

sock it away with ING. 3.6% is better than a loss.

Why not look at Vanguard Prime MMF? It is paying 4.46% now.