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Old 02-03-2019, 05:09 PM   #21
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I didn't read the article, but is there a "problem"? Take the RMD or not (and take a nice penalty, though) and then do with it what you want.
Actually it's:
Take the RMD or Pay the penalty of 50% AND then you still have to take the RMD.
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Old 02-03-2019, 05:14 PM   #22
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But if you don't need it, then you can simply repurchase the same low stocks in a taxable account. Then the price of the market does not matter.

If however you are going spend it, then yes, it's nicer when the market is UP.

You do not even have to do that. I simply transfer the number of shares required for RMD from my IRA to my taxable account. I have been doing that for years.
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Old 02-03-2019, 05:19 PM   #23
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Reinvest some. Give away some.
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Old 02-03-2019, 06:56 PM   #24
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You don't have to pay the taxes if you donate the RMD to charity via QCD.
Yea, well, that's good for some of it. When we get to 15% of AGI, we stop & figure what to do with rest. Normally goes into munis.
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Old 02-03-2019, 08:26 PM   #25
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I find it hard to understand why someone wouldn't know that you do the same thing with RMD money as with any other money - spend/save/invest it, in some combination. Isn't that what people do with money all along?
For some reason, quite a few folks get the idea in their heads that RMD money is somehow gone from their retirement nest egg after it is withdrawn. For some reason it takes extra imagination to realize that only the taxes owed are truly “gone” and the remainder can be reinvested. Maybe some folks have only IRA type funds for their retirement so it simply hasn’t occurred to them that after-tax accounts can fund retirement as well.
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Old 02-03-2019, 08:28 PM   #26
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Yes, I believe that's the case. I didn't want to try to enumerate what specific benefits might accrue because I am just not that much of a tax maven. But maybe the adjustments to medicare premiums would be affected too?
Yes, because any QCD never shows up as part of your MAGI.
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Old 02-03-2019, 09:34 PM   #27
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For some reason, quite a few folks get the idea in their heads that RMD money is somehow gone from their retirement nest egg after it is withdrawn. For some reason it takes extra imagination to realize that only the taxes owed are truly “gone” and the remainder can be reinvested. Maybe some folks have only IRA type funds for their retirement so it simply hasn’t occurred to them that after-tax accounts can fund retirement as well.
You make a good point.

That people have to pay taxes from their assets due to RMD vs. having withholding as when they work seems to get them more upset than with withholding taxes as they go thru the year. I think it gives insight into how a lot of working folks would react to taxes if there wasn't withholding & had to pay them from their assets at the end of the year.
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Old 02-04-2019, 07:34 AM   #28
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This is my first year of RMDs. It does make me feel richer, but now more decisions are needed on how to reinvest, gift, and/or spend. Additional tax bite is compounded by DW's pension starting in July and then she will start drawing SS next year. Can't complain though, as overall it's a good problem to have and kind of feels like I'm returning to some of my working years in terms of disposable income.
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Old 02-04-2019, 07:40 AM   #29
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This is my first year of RMDs. It does make me feel richer, but now more decisions are needed on how to reinvest, gift, and/or spend. Additional tax bite is compounded by DW's pension starting in July and then she will start drawing SS next year. Can't complain though, as overall it's a good problem to have and kind of feels like I'm returning to some of my working years in terms of disposable income.
Is your annual income now higher due to the RMDs?

You aren’t just shifting from taking all income from taxable to part from taxable and rest from the RMD?
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Old 02-04-2019, 07:48 AM   #30
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For some reason, quite a few folks get the idea in their heads that RMD money is somehow gone from their retirement nest egg after it is withdrawn. For some reason it takes extra imagination to realize that only the taxes owed are truly “gone” and the remainder can be reinvested. Maybe some folks have only IRA type funds for their retirement so it simply hasn’t occurred to them that after-tax accounts can fund retirement as well.
True! I had a thread a while back that asked the question when you start taking RMD would your portfolio wealth go down after RMD. The responses to that question was that data shows if reinvested your portfolio would increase even when the taxes were taking out.

We have to remember it is done each year so markets change and taxes are done over years not all at once.
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Old 02-04-2019, 08:32 AM   #31
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Is your annual income now higher due to the RMDs?

You aren’t just shifting from taking all income from taxable to part from taxable and rest from the RMD?
The majority of my savings are before tax, so the RMDs are now requiring me to take more than DW and I need.
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Old 02-04-2019, 08:48 AM   #32
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The majority of my savings are before tax, so the RMDs are now requiring me to take more than DW and I need.
Perhaps you can use the extra monies after tax to make your portfolio more tax efficient if needed with the shift to taxable from TIRA related to equity/bond placement.
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Old 02-04-2019, 09:20 AM   #33
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The majority of my savings are before tax, so the RMDs are now requiring me to take more than DW and I need.
But doesn’t that just mean you don’t need to draw on your taxable accounts anymore? Or draw much less?
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Old 02-04-2019, 09:33 AM   #34
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Perhaps you can use the extra monies after tax to make your portfolio more tax efficient if needed with the shift to taxable from TIRA related to equity/bond placement.
That would be the plan in terms of reinvesting, continue to use tax efficient funds/etfs.

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But doesn’t that just mean you don’t need to draw on your taxable accounts anymore? Or draw much less?
Right, I have no need to touch my taxable accounts.
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Old 02-04-2019, 10:20 AM   #35
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The majority of my savings are before tax, so the RMDs are now requiring me to take more than DW and I need.
That's a good thing. Congrats that you have more than you need.
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Old 02-04-2019, 10:33 AM   #36
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No RMD for another 3 years but our current IRA WD is higher than our RMD will be.
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Old 02-04-2019, 11:24 AM   #37
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I have been taking RMD for 6 years. I move the money from a Money Market account in my IRA to the same on the taxable side. Turbo Tax tells me I pay 17% total tax for my income. I convert the RMD to a withdrawal rate. ie if my withdrawal is $22,500, and I pay 17% of that in tax $3,825, the other returned to the Money Market, that is a .00765 SWR.

This makes sense to me. If I were tapping the taxed money market, I think it would make it harder to determine an actual SWR. So far I have not had to tap it.
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Old 02-05-2019, 12:50 AM   #38
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But if you don't need it, then you can simply repurchase the same low stocks in a taxable account. Then the price of the market does not matter.

If however you are going spend it, then yes, it's nicer when the market is UP.
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You do not even have to do that. I simply transfer the number of shares required for RMD from my IRA to my taxable account. I have been doing that for years.
I can transfer shares from my IRA at Schwab to my taxable account, and it's done in real time as soon as I hit "confirm". If the transfer is done during a trading session, the most recent trading price of the stock or ETF shares right at that point is used to determine the amount reported to the IRS. The withheld tax is also computed the same way.

Merrill Edge does not have this capability. Withdrawal is done in cash only, requiring shares to be sold, then repurchased in the taxable account.

So, this in-kind withdrawal of shares is not universally available at all brokerages.
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Old 02-08-2019, 04:56 PM   #39
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Roth convert the IRA over a scheduled # of years, say 5. You can convert all of the IRA or convert 2/3 and let the other 1/3 go to RMD. Put the remaining IRA in bonds. It will add a little to taxes but not much and the Roth grows tax free. In your old age you'll have a nest egg to cover catastrophic expenses like a bad medical diagnosis over and above your normal WR. In other words the Roth acts as self insurance.
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Old 02-08-2019, 05:18 PM   #40
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Roth convert the IRA over a scheduled # of years, say 5. You can convert all of the IRA or convert 2/3 and let the other 1/3 go to RMD. Put the remaining IRA in bonds. It will add a little to taxes but not much and the Roth grows tax free. In your old age you'll have a nest egg to cover catastrophic expenses like a bad medical diagnosis over and above your normal WR. In other words the Roth acts as self insurance.
+1.

When RMD hits we would have converted 50%+ of our IRAs to Roth and we may continue to do so on a smaller scale after RMD.
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