No. of Recommendations: 5
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at the more favorable 0% or max 15% rate instead as the ordinary income they will be if left in the IRA and eventually withdrawn.

BruceM
Print the post  

Announcements

The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement