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Hi MCCrockett

The RMD is a tax event, not a cash flow event, although everything ever written on RMD's seems to try to make it a cash flow event. Remember, there is no IRS rule that requires RMDs be taken in cash and then consumed.

If the household requires cash flow from the IRA in the year of the RMD that exceeds the RMD, then the RMD, for all practical purposes, does not exist as it is already being met by the cash flow requirement of the household. Eventually, the RMD will exceed the household cash flow need. The excess of RMD amount over CF need leads to....

If the RMD amount exceeds household CF need, then the owner should do in-kind withdrawals of stocks/funds whose value meets the RMD amount, and choose those stocks/funds that pay qualified dividends (QD). Doing this early in the RMD year means all subsequent QD will be received at the more favorable 0% or max 15% rate instead as the ordinary income they will be if left in the IRA and eventually withdrawn.

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