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Is it better to take an RMD before or after capital gains distributions?
Old 12-11-2021, 08:29 AM   #1
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Is it better to take an RMD before or after capital gains distributions?

I have to take an RMD this month from a Vanguard fund that is scheduled to make capital gains distributions that will be substantial, and I'm planning to deposit the money into another fund. Is it better to make the withdrawal a few days before or after the distribution? And is it better to deposit the money into a fund before or after that fund has made distributions? Or does it make no difference if it's only a few days either way?

Guess I should know this by now, but what I'm reading on the subject is confusing. Never too late to learn something new!
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Old 12-11-2021, 09:48 AM   #2
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It shouldn't make any difference, given that the distribution is not taxable/is in an IRA. Taxable account, wait until after the distribution to buy.
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Old 12-11-2021, 10:21 AM   #3
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OldShooter is right. In all situations, the price of the mutual fund should drop by the amount of the distribution on the day of the distribution.

In a taxable account, you need to decide if you want that distribution or not. In an IRA, it doesn't matter because IRAs are tax-deferred and all withdrawals are treated as ordinary income. (Unless you have basis, but that's a separate topic.)
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Old 12-11-2021, 11:13 AM   #4
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OP here, & I apologize. I just noticed I posted the same question a year ago & got the same good answers. (Where is that head-banging emoji when I need it)

Oh well, maybe the info was helpful to someone else too.

Happily I've learned SO MUCH on this site from reading about others' financial strategies this year, including increasing withholding on RMDs to cover estimated tax payments. Thanks to everyone in this wonderful, generous community.
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Old 12-12-2021, 08:26 AM   #5
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Doesn't matter what happens in the account you are pulling the RMD. Your focus should be with the fund(s) you are purchasing in taxable account using the RMD. Taxes matter in the taxable portion of your finances.
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Old 12-12-2021, 08:32 AM   #6
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Quote:
Originally Posted by lucky penny View Post
OP here, & I apologize. I just noticed I posted the same question a year ago & got the same good answers. (Where is that head-banging emoji when I need it)

Don't worry, I know someone that has done that more than once.
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