How do you Withdraw RMD?

[Idnar7]

I will be 70 next year. All my funds are at Fidelity. Will they contact me about RMD? Do I need to contact them? I do not have an account contact with them. Do you select what to withdraw from where? Do they have an "equally from all" option? I am planning to take the full years RMD during first qtr. Just curious how others handle their RMD with Fidelity/ Vanguard/ Schwab etc. Fidelity does have a brick and mortar in my town but I haven't been there.

 

[GrayHare]

"Equally from all" I don't recall seeing such an option. An important element is computing your RMD, as the penalties are steep if you withdraw too little. This also means the brokerages are timid about telling you your RMD. They might suggest a dollar amount, but it comes with caveats because they don't want to be held resposible for a miscalculation.

If you use the online features at the brokerages there will be an option to withdraw from IRA. You can sell off any liquid holding you wish. Many people sell some/all an investment that has overperformed relative to the others, in order to lock in the gains.

 

[Magoo30]

You can set up your RMD from your account in Fidelity online. Fidelity will calculate how much you need to take out. Here is the link to read up about in on Fidelity website.
https://moneymovement.fidelity.com/ftgw/fbc/mm/mmRDCLanding

 

[Souschef]

All the IRS cares about is the total amount. They do not care which IRA you withdraw the money from, or how much from each one.
I recognize I am a little compulsive about this. I have a spreadsheet that calculates my yearly RMD based on the IRS tables.
I have a schedule for withdrawals based on the quarterly estimated tax payments. I also have scheduled withdrawals for our sons' birthdays.
I have simplified the process by drawing down one account and closing it, so I only have 2 accounts to deal with.

 

[Sunset]

OP - Why don't you phone Fidelity and ask them ?
They have a support phone number and you can be sure many of their clients call about RMD's.

 

[street]

With the Company I'm with I can sell of what funds I want to sell at RMD time. It will then just roll over to the market funds I want them to go to. I will have them go right back into the same funds but of course will be taxable in the stock market. My Company that I'm with will do the RMD automatically each year if I want it that way.

 

[davebarnes]

Fidelity shows you a "warning message" with the amount you need to withdraw this year.

My tactics (at age 70.5) are to withdraw all our needed spending money from my IRA. So, I am way over the RMD. Hopefully, my tIRA will be smaller in a decade when the RMD % is much higher.
I am leaving my wife's tIRA untouched until she hits 70 in 8 years.

 

[kaneohe]

My experience is that most, if not all,custodians provide a notice in January telling you that RMD is required with a $$ amount. For IRAs, that is typically all that will happen. It is up to you to request that the RMD be distributed........either automatically with the timing you specify or manually by requesting specific $$ amounts and desired withholding. If you have multiple IRA accounts, you can take your total RMD from a single one or any combination of accounts.............and since you can do this, custodians will not automatically do anything since they don't know what you plan to do.

For 401Ks, you have to take the RMD out of every single one in the required amounts. Since the custodians then know what each RMD is, many will have a default withdrawal late in the yr to protect you from penalties.
401K plan details can vary by employer. My employer plan default at Fidelity is to withdraw pro-rata from each investment. Some plans allow you to specify which investments to draw from first.......so,it depends........

 

[Bamaman]

My wife was 70 last June, and I got a little lazy and didn't withdraw the RMD until the market dropped at the EOY. So I had until 4/1/2019 to make her last year's RMD. She has until 12/31/2019 to make this year's withdrawal. So I'll have to pay taxes on 2 years' withdrawals this one year only.

Yes, you will get a couple of letters from Fidelity telling you RMD's are required to avoid a 50% penalty--and the minimum withdrawal. You must have a money market "cash" account with Fidelity. You put through a sell order on the mutual funds and the proceeds will go into the cash account. At the same time, you specify your state and federal withholding tax amounts. Then you put an order in 2 days later to transmit the funds to your home bank account. It's very easy to work the system.

The decisions are when to sell, as you want to pick the date when the market's up. And you need to think about which funds to sell (if you're diversified). Do you sell the non-performers and keep the best funds?

Nice that you have a Fidelity office in your city. I don't. It's nice to have them to answer questions in person if you have any. Most everything can be done online as they have a great computer system.

 

[Gotadimple]

You should get a notice from Fidelity (I'm not with them but I'm sure many brokerages follow the same process). Also look at your IRA on the Fidelity website. My Schwab IRA shows me the value of my investments, the cash available, and the calculated IRA RMD that i need to take starting when I turn 70.5. It's also on my statement.

As you're a year away, I'd expect you'll see something in the mail about 6 months after you turn 69. With the RMD calculation showing up about the same time.

 

[Starsky]

You can call Fidelity and ask them the correct amount to withdraw for the year and they will calculate it for you. You can also ask them to execute the withdrawal - you'll need to specify what you want them to sell - at any time during the tax year. You will start to get reminders annually from them reminding you about RMDs.

 

[Sunset]

My experience is that most, if not all,custodians provide a notice in January telling you that RMD is required with a $$ amount. For IRAs, that is typically all that will happen. It is up to you to request that the RMD be distributed........either automatically with the timing you specify or manually by requesting specific $$ amounts and desired withholding. If you have multiple IRA accounts, you can take your total RMD from a single one or any combination of accounts.............and since you can do this, custodians will not automatically do anything since they don't know what you plan to do.

For 401Ks, you have to take the RMD out of every single one in the required amounts. Since the custodians then know what each RMD is, many will have a default withdrawal late in the yr to protect you from penalties.
401K plan details can vary by employer. My employer plan default at Fidelity is to withdraw pro-rata from each investment. Some plans allow you to specify which investments to draw from first.......so,it depends........

Good point, OP didn't mention any 401K's which are treated separately from IRA's.

 

[The Cosmic Avenger]

Thanks, I had no idea it didn't matter which IRA it came out of, I've been doing it proportionately, as that's what Fidelity reports to me and that's what they will do for you automatically.

So to clarify, Fidelity DOES let you withdraw proportionally from all positions (e.g., Google is 40% of an account and Facebook is the other 60%, your RMD for the year is $10K, it would sell $4K of Google stock and $6K of Facebook stock for you). I have it set up that way, and I have 25% tax withheld for my own convenience. I don't like feeling like I have MORE money than I do...actually, I like it the other way around! If I don't feel like I have much, I don't spend as much.

Anyway, you can also have it automatically sent to another account, or you can have a check mailed to you, both of which I've done. I have had trouble getting it automatically transferred to another bank, but I have a Fidelity taxable investment account that has my other bank linked, and so I just have the RMD sent to the taxable account, where I can transfer it easily.

Note: unfortunately for me (in a personal rather than financial sense), these are both inherited IRAs, but while some things may be different (I have RMDs yet I'm only in my 40s), I don't think the account features are any different, though. I've been very pleased with Fidelity, they generally make things easy to do online, with a few exceptions, but fewer than any other bank/brokerage I've used.

 

[kaneohe]

Thanks, I had no idea it didn't matter which IRA it came out of, I've been doing it proportionately, as that's what Fidelity reports to me and that's what they will do for you automatically.
.............................

Note: unfortunately for me (in a personal rather than financial sense), these are both inherited IRAs, but while some things may be different (I have RMDs yet I'm only in my 40s)................................

I would guess the rest of us weren't thinking about inherited IRAs. Assuming they were not inherited from spouse, these inherited IRA are a separate group or groups from your own IRAs. You can only aggregate RMDs of the same type......you can't group your own and inherited IRAs. For inherited IRAs, they need to be from the same owner to be aggregated.

 

[aza455]

The rules don’t require that you pull cash out of your IRA, only that a certain amount comes out of the tax shelter each year starting at age 70½ so the IRS can tax it. It’s perfectly okay to have stock or mutual fund shares transferred from your IRA to a taxable account to satisfy your RMD.

So, if you don’t need cash, just transfer your shares in-kind from the tax-deferred account, like an IRA, to your taxable account. That would satisfy the RMD requirement.

 

[SecondCor521]

Although most of the thread is about Fidelity, OP mentioned Vanguard.

My Dad has his traditional IRA with Vanguard. He has it set up so they calculate his RMD amount for him, autosell proportionately $(RMD/12) every month on the 15th, withhold X% for federal withholding, then move the net proceeds to his Vanguard taxable money market.

It's nice to have things automated because about a year ago he started losing his mental acuity about such things.

 

[GrayHare]

Note that if all of your IRA money is in the Roth variety of IRA, you have no RMD.

 

[SecondCor521]

Note that if all of your IRA money is in the Roth variety of IRA, you have no RMD.

True. However, inherited Roths currently do require RMDs (unless you drain it all in 5 years).

 

[Badger]

My wife and I both have our IRAs in Vanguard. They are set up to sweep the dividends into a MM account to use as our RMD account. This year we will both be paying RMD and I called up for them to make the withdrawal and transfer to a taxable MM account for us to tap into through the year if needed. I will be setting up an automatic transfer at our chosen date for future years. So easy and all I intend to do is check the math to make sure the proper amount is transferred each year.


Cheers!

 

[kaneohe]

................................. So easy and all I intend to do is check the math to make sure the proper amount is transferred each year.


Cheers!

Not sure which math you are referring to but it's not a bad idea to check their RMD calculation. I have a bunch of different custodians between IRAs/401Ks
and though the track record is quite good, once upon a time, a big name custodian calculated a bit off.........not much but enough to notice. Turns out somebody (or their computer) entered the yr end value at the start of the day instead of the end of the day/year.

 

[Badger]

Not sure which math you are referring to but it's not a bad idea to check their RMD calculation.

That's the math I was referring to. It would take all of 30 seconds.


Cheers!

 

[Badger]

Not sure which math you are referring to but it's not a bad idea to check their RMD calculation.

That's the math I was referring to. It would take all of 30 seconds.


Cheers!

 

[eytonxav]

I will be 70 next year. All my funds are at Fidelity. Will they contact me about RMD? Do I need to contact them? I do not have an account contact with them. Do you select what to withdraw from where? Do they have an "equally from all" option? I am planning to take the full years RMD during first qtr. Just curious how others handle their RMD with Fidelity/ Vanguard/ Schwab etc. Fidelity does have a brick and mortar in my town but I haven't been there.

If you turn 70.5 during the calendar year, you would have to take your RMD that year or by April 15th of the following year. Tax wise, better to not push off taking it till the next year for most situations I would think. Do you have a Fidelity MM fund? Personally, I would suggest placing the years RMD in a Fidelity MM fund within your IRA, and taking periodic distributions from that fund vs taking the full years RMD distribution during the first quarter, unless you can plop the $s in a more attractive option. You can control how to withdraw from other IRA assets to get to your RMD amount. Fidelity will calculate your RMD for you and you can go by that amount provided all funds are housed there.

 

[BOBOT]

Another point

Don't forget about Qualified Charitable Distributions; funds withdrawn from your IRA to satisfy the RMD can be directed to any of thousands of qualified orgs. and are not taxed.
If you're making donations anyway this is a great way to lower the tax bite.

 

[redduck]

I've been doing the RMD thing for three (maybe four?) years now. The brokerage handles it automatically including all computations. The RMD activates once, late in the year. I make sure I have enough money in my MMF to take care of the distribution. It's incredibly easy and the brokerage gives me notice both before and after action has been taken.