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When to take 2021's RMD?
Old 12-18-2020, 04:47 PM   #1
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When to take 2021's RMD?

Doing some yearend financial stuff today which got me thinking how best to manage 2021. Our RMDs are substantial and we usually withdraw in Q4. Me thinks that given the high of the market right now, it might make sense to do the withdrawal in early January next year. Thoughts...hehehe?
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Old 12-18-2020, 05:09 PM   #2
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Id be tempted to do it while market is strong too. Or, you could stretch out quarterly...just in case?
But, I struggle with second guessing everything.
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Old 12-18-2020, 05:17 PM   #3
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Id be tempted to do it while market is strong too. Or, you could stretch out quarterly...just in case?
But, I struggle with second guessing everything.
Good point. I'm am just so in the habit of thinking annually, whether outgoing or incoming, so always overlook the quarterlies. Or even 2 withdrawals, one in January and the other in Q4 which would include the deduction for the taxes.
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Old 12-19-2020, 02:56 PM   #4
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Yeah, Market Timing... cause that always works out so well.
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Old 12-19-2020, 03:10 PM   #5
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Yeah, Market Timing... cause that always works out so well.
Well, any decision like this is market timing. In our case, we withdraw as needed, then finish up what's required in late 4Q. If the market is strong then we'll probably sell equities. If weak, we'll sell from the fixed income side. The market timing philosophy for us is simply the historical observation that the market is more likely to go up during any year than it is to end up down.
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Old 12-19-2020, 04:00 PM   #6
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Quote:
Originally Posted by TrvlBug View Post
Doing some yearend financial stuff today which got me thinking how best to manage 2021. Our RMDs are substantial and we usually withdraw in Q4. Me thinks that given the high of the market right now, it might make sense to do the withdrawal in early January next year. Thoughts...hehehe?
We’re a ways away from RMDs, but I always contemplated setting enough aside in Jan in very low volatility funds inside the IRA to cover that year’s RMD, and then I could withdraw it at any time during the year. I’ve never been one to try to squeeze out the last nickel - prefer peace of mind/not making short-term bets.

I imagine everyone has their preferred method that works for them.
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Old 12-19-2020, 04:08 PM   #7
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I've been taking RMD's for several years now. I usually set up my IRA to distribute a set amount from cash funds each month and have it put into my Ally money market account.

We use that Ally account to cover some monthly bills from credit cards (PenFed, Capital One) which pay us 2.0% and 1.5% respectively.

There are many ways to take RMD's. Some folks don't need to spend the distribution and will invest the pulled funds.
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Old 12-19-2020, 05:46 PM   #8
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I had planned on using my RMD for expenses when I made a plan 10 years ago. So with the new 72 start I am still sticking to my plan, but converting it to a Roth and than spending if needed. My travel budget in 2020 was zero, so I may not be spending any of it this year either. I already have more cash than I need.
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Old 12-20-2020, 05:35 AM   #9
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You're asking the internet to predict next year's stock market returns. What could go wrong?
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Old 12-20-2020, 05:57 AM   #10
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We have a smaller RMD from beneficiary IRA. We take that after dealing with last year's taxes.

When the big RMD hits in 5 years or so I'm on the fence about what to do. So this thread will be interesting to follow.
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Old 12-20-2020, 07:23 AM   #11
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As I indicated in my recent poll, I think there's a remote but non-zero chance that there will be new legislation suspending RMDs for 2021, so I'm going to wait until at least February, even though right now I would like to start using those for supplemental spending if I stay unemployed/retired through 2021.
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Don't overlook...
Old 12-22-2020, 06:19 PM   #12
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Don't overlook...

...Qualified Charitable Distributions - QCDs.


If you're inclined to support worthy causes, you can lessen the tax consequences of RMDs.


IMO potentially more important than timing of w'drawals.
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Old 12-22-2020, 09:28 PM   #13
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With a 75/25 AA in DM's tIRA we usually wait until the end of the year. At that time if the market is way down I'll take only from the bond side. Otherwise I use the RMD to rebalance. That allows for growth during the year, but retains the option not to sell any stocks in a bear market.

She also has an non-spousal inherited tIRA which is in its final two years. I moved to all bonds there to avoid huge market swings while the RMD's are something like 50% of the account. Turned out to be unneccessary with no RMD's this year but her 75/25 AA is still intact overall. The RMD is probably 100% next year. I'll probably take that out early in the year so growth or losses go into the taxable account and get a basis step-up or a capital loss harvest.
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