Required Withdrawals Question

[Graybeard]

I have several non-Roth IRA accounts. Can I take the total reqtuired RMD amount from only one account? Or do I have to take the RMD percentage from each account?

You can take it from one account or several, as long as the total adds up to your RMD. In my case, I have 2 accounts, and take part out of each one.

If one of those non-Roth IRA accounts is a 401k (and I think this applies to 403b too) you can not aggregate those, yoy have to take the 401k RMD from the 401k and then you aggregate the IRAs.

Also I have read about taking the RMD in kind. I spoke to Vanguard and they require you (maybe it's an IRS rule or maybe it is just Vanguard) to specify the RMD in shares not a dollar amount. I assumed you could do an in kind RMD is dollars.

 

[NW-Bound]

If one of those non-Roth IRA accounts is a 401k (and I think this applies to 403b too) you can not aggregate those, yoy have to take the 401k RMD from the 401k and then you aggregate the IRAs.

Also I have read about taking the RMD in kind. I spoke to Vanguard and they require you (maybe it's an IRS rule or maybe it is just Vanguard) to specify the RMD in shares not a dollar amount. I assumed you could do an in kind RMD is dollars.

If you specify the amount in dollars, it will not result in a whole number of shares, and fractional shares cannot be transferred.

Hence, you have to transfer a whole number of shares.

PS. The above is true for individual stocks and ETFs. I wonder if fractional MF shares can be transferred. You can buy/sell MF in dollar amounts, and this results in fractional shares being bought/sold.

 

[audreyh1]

I’m pretty sure fractional shares of mutual funds could be transferred in kind. They are bought and sold in fractional shares all the time.

 

[MissMolly]

I transfer my RMD from an inherited IRA to my taxable account using dollar amounts at Vanguard. Never a problem. I hold mutual funds in the IRA.

 

[SecondCor521]

I wonder if fractional MF shares can be transferred. You can buy/sell MF in dollar amounts, and this results in fractional shares being bought/sold.

I have transferred fractional MF shares at Vanguard to do in-kind Roth conversions. I think one can go down to 1/1000th of a share, so 14.378 shares or whatever. I've also gifted fractional amounts of Vanguard MFs to my kids' account at Schwab. Works just fine.

Also, FWIW, my Dad has dividend reinvestment on a number of stocks in a Vanguard account, and they do fractional shares there down to the 1/1000th as well. So 1.349 shares IBM or whatever.

 

[TheWizard]

As someone else may have mentioned, your RMD is just the amount you need to pay income taxes on each year.
You don't have to SPEND it all.

My retirement income consists of pension/annuity + SS + RMD and i invest a fair amount of that total in my taxable account...

 

[audreyh1]

Schwab handles fractional shares of their ETFs as they allow automatic dividend reinvestment. So I suspect they also allow fractional shares for in kind transfers.

 

[NW-Bound]

As someone else may have mentioned, your RMD is just the amount you need to pay income taxes on each year.
You don't have to SPEND it all.

My retirement income consists of pension/annuity + SS + RMD and i invest a fair amount of that total in my taxable account...

When I start RMD in a few years, it will go into my Roth account. There, it will continue to grow tax-free.

 

[audreyh1]

Your RMD can’t be put in your Roth account. Only the amount above your RMD each year can be converted to Roth.

 

[NW-Bound]

Your RMD can’t be put in your Roth account. Only the amount above your RMD each year can be converted to Roth.

DANG! I am glad I get corrected. DANG!

PS. This certainly will affect my plan. May need even more aggressive Roth conversion right now!

 

[Chuckanut]

When I start RMD in a few years, it will go into my Roth account. There, it will continue to grow tax-free.

You can do that?!!!??!! Legally?

Now that does open some interesting doors.

 

[Dash man]

You can do that?!!!??!! Legally?

Now that does open some interesting doors.

No, you can’t. See post #35

 

[Chuckanut]

No, you can’t. See post #35

Thanks for pointing that out. I missed that post for some reason. Maybe I was too excited about the possibilities of moving money via an RMD to a Roth. My bad.

 

[NW-Bound]

Say "Hello" to the 24% tax bracket.

The saving grace is that this bracket is fairly wide. There's no fear that I would get to the next bracket with the market in the doldrum for the next few years. And if it happens by a miracle, I guess it's a nice problem to have as they say.

 

[mz44]

No, you can’t. See post #35

I believe you need earned income you can still contribute to a ROTH

 

[Dash man]

I believe you need earned income you can still contribute to a ROTH

You do, but I think he was considering Roth conversions in lieu of RMDs.

 

[Graybeard]

If you specify the amount in dollars, it will not result in a whole number of shares, and fractional shares cannot be transferred.

Hence, you have to transfer a whole number of shares.

PS. The above is true for individual stocks and ETFs. I wonder if fractional MF shares can be transferred. You can buy/sell MF in dollar amounts, and this results in fractional shares being bought/sold.

No, he knew I held mutual funds not ETFs, in kind requires whole shares. I suppose you can guestimate the number of shares based upon the index level or the ETF equivalent's gain or loss around 3:50 pm and then adjust it by doing the balance not in kind the next day or week.

 

[Venturer]

So youare required to take out XX dollars and if you then put it into standard savings account you get to pay tax on the interest again. Happy days are here again!

 

[RunningBum]

So youare required to take out XX dollars and if you then put it into standard savings account you get to pay tax on the interest again. Happy days are here again!

You can avoid this by doing Roth conversions before you are required to take distributions.

 

[Badger]

So youare required to take out XX dollars and if you then put it into standard savings account you get to pay tax on the interest again. Happy days are here again!

I'm not sure what you mean by "again" but once you pay tax on the RMD that would include the interest you have earned up to that time you won't pay taxes on that interest again. However, you will pay tax on the new interest earned the same as you would if it was interest on any money in a taxable account.

Cheers!

 

[youbet]

So youare required to take out XX dollars and if you then put it into standard savings account you get to pay tax on the interest again. Happy days are here again!

No. You’d be paying tax on the interest earned from the savings acct for the first time.

 

[TheWizard]

So youare required to take out XX dollars and if you then put it into standard savings account you get to pay tax on the interest again. Happy days are here again!

Savings account?
Well, you can invest your unspent money however you like.
I invest everything beyond $10k in checking into my taxable investment account at Vanguard and eventually into stock index funds.
I'm retired with no earned income, you see.

Note that withdrawals from tax-deferred accounts, RMD or otherwise, are considered 100% ordinary income in the current year...

 

[Winemaker]

Say "Hello" to the 24% tax bracket.

The saving grace is that this bracket is fairly wide. There's no fear that I would get to the next bracket with the market in the doldrum for the next few years. And if it happens by a miracle, I guess it's a nice problem to have as they say.

And most likely IRMAA, too!

 

[NW-Bound]

And most likely IRMAA, too!

Oh well, I guess it's better to be taxed a lot than not having any money and being on assistance.

Just pay the tax and party on.

 

[imnontrad]

Well, technically yes. But that does not mean that the amount of money you withdraw is enough to live on.
Plus if you die before it is emptied, your heirs (except if donated to a non profit) will pay the tax on that and have a max of 10 years (with some exceptions) to withdraw the funds.
Once you have satisfied your RMD, either by withdrawal or donation as a QCD, you can withdraw more and convert to Roth too. Just be aware of not only your tax bracket but also the Medicare IRMAA brackets. When you look at th ebalance in the pre-tax accounts, you not only have to look at withdrawals over your lifetime but, if married, the effect it would have on your spouse, including future Medicare surcharges.