RMD -From where to where this year

[jpjr]

Hello all,


It is a cool rainy day and I have nothing better to do than finalize how I am going to process my first RMD ($20,000). We are not talking big bucks and I'm not looking to find any exotic place for the funds, but thought I'd get some input from the experts here.


Me:$ 618,830 ( 60/35/5 )

Non-Taxable IRA $ 466,830
VDIGX -Dividend Growth - 210,330
VGSTX - Star - 132,500
VSCGX - Conservative Growth -124,000

Roth - $ 142,000
VSCGX Conservative Growth - 79,500
VDIGX Dividend Growth - 62,500

I Bond (1st 1/4 2022) 10,000


DW: $ 421,550 ( 50/45/5 )

Non-Taxable IRA $ 286,550 (RMD required in two years)
VSCGX Conservative Growth 109,000
VSMGX Moderate Growth 177,550

Roth $ 100,000
VGSTX 100,000

Money Market 25,000

I Bond ( 1st 1/4 2022) 10,000

Probably too much sitting in combined checking and savings accounts already: $ 35,000

No Debt, and between small pension and SS we have enough to cover all our regular expenses. We do travel when possible, but other than that we are set for our daily needs.

With the RMD our effective tax rate is 12.6% this year.

From where would you draw and where might I put the 20K?

Thanks!

jpjr

 

[SecondCor521]

Well, you have to take it from your traditional IRA. No choice there.

As far as which investment, I would (a) ratably withdraw from each if you agree with your AA, (b) withdraw from whatever you think you have too much of, or (c) a combination of (a) and (b) such that you're happy with the AA in your traditional IRA as it would be after the RMD.

If you're charitably inclined, making a QCD with the distribution is generally a smart idea. There are requirements to be met, and it's getting a bit late in the year to do this but still possible.

As to where to put it, it sounds like you don't want to put it in your checking account and don't have any immediate financial plans for the money. I'd consider my time frame, risk tolerance, and overall situation, but for me I'd just invest it in my taxable account according to my AA.

 

[Bamaman]

This is my first RMD year. I've got to withdraw many times what you're required to move around.

What's nice is that I've not taken any 401K/IRA funds until age 72. I really don't have anything to do with the money--so I'll just pay the taxes and move the balance to other FIDO accounts.

My wife said to buy a new Corvette, but I cannot afford the insurance and it doesn't meet our lifestyle. I'm more of a Porsche 911 type of guy, and they're too much $.

I'd just take out 1/3, 1/3, 1/3 out of your present IRA/401K type accounts. I'm just sorry that this day is not a year ago.

 

[TheWizard]

I take my RMD pro rata from the mix of my investments, 1/12 every month.
I take my SS and my pension/annuity every month as well.

Then I invest the excess from these income streams into stock index funds in my taxable account one or two times per month.

I think it's a minor mistake to treat RMD income as something special or different...

 

[DrRoy]

As far as which investment, I would (a) ratably withdraw from each if you agree with your AA, (b) withdraw from whatever you think you have too much of, or (c) a combination of (a) and (b) such that you're happy with the AA in your traditional IRA as it would be after the RMD.

+1

 

[target2019]

Hello all,


It is a cool rainy day and I have nothing better to do than finalize how I am going to process my first RMD ($20,000). We are not talking big bucks and I'm not looking to find any exotic place for the funds, but thought I'd get some input from the experts here.


Me:$ 618,830 ( 60/35/5 )

Non-Taxable IRA $ 466,830
VDIGX -Dividend Growth - 210,330
VGSTX - Star - 132,500
VSCGX - Conservative Growth -124,000

Roth - $ 142,000
VSCGX Conservative Growth - 79,500
VDIGX Dividend Growth - 62,500

I Bond (1st 1/4 2022) 10,000


DW: $ 421,550 ( 50/45/5 )

Non-Taxable IRA $ 286,550 (RMD required in two years)
VSCGX Conservative Growth 109,000
VSMGX Moderate Growth 177,550

Roth $ 100,000
VGSTX 100,000

Money Market 25,000

I Bond ( 1st 1/4 2022) 10,000

Probably too much sitting in combined checking and savings accounts already: $ 35,000

No Debt, and between small pension and SS we have enough to cover all our regular expenses. We do travel when possible, but other than that we are set for our daily needs.

With the RMD our effective tax rate is 12.6% this year.

From where would you draw and where might I put the 20K?

Thanks!

jpjr

1) Your IRA's are not "Non-Taxable" but they are "Tax-Deferred."
2) You have overlap with VSCGX, VGSTX and VSCGX, and with VSCGX/VSMGX. It's up to you, though.
3) $20K RMD will cover two iBonds 10K each in 2023.
4) $35K in savings and checking is losing money (.03% vs. 3.00% or better).

 

[jpjr]

Thanks everyone. As originally stated this is not a particularly complex issue as the dollar amounts are relatively modest. I understand the collective responses and agree with all as I've been waffling back and forth with no firm commitment on my final decision. Target2019 - yup, tax-deferred, just not thinking when I posted. Also, I am aware that there is redundancy with the funds in our baskets, especially as a shift to consolidation to one or the other is not going to make a significant difference in the overall portfolio allocation. That change is simply a matter of inertia (or rather a lack there-of). I-bonds in January are probably going to come from the 35k in checking/savings.


Again thanks for your thoughts.


Corvette? Who needs insurance on a corvette? You would probably baby it to the point of polishing the chrome every weekend while parked in the driveway and then rushing to get it back in the garage when the first gray cloud appeared in the horizon.

 

[Car-Guy]

Corvette? Who needs insurance on a corvette? You would probably baby it to the point of polishing the chrome every weekend while parked in the driveway and then rushing to get it back in the garage when the first gray cloud appeared in the horizon.

Insurance on my 4x4 trucks was as much or more than my Vetts, IIRC.