Greetings all - I have a Vanguard IRA account and need to do an RMD. I also have a regular non-retirement brokerage account. Don't need the cash but have to do an RMD. According to Vanguard, I can do an in-kind transfer of securities from the IRA to the non-retirement brokerage account. However, my understanding was that the cost basis would be calculated as of the date of transfer, not the original purchase in the IRA account. There is no advantage then to do this? It's actually easier (no paperwork) to sell the appropriate RMD amount of a security, transfer the cash to the non-retirement brokerage account, and then buy back the stock.Just wondering if the logic is correct and if anybody has any thoughts to this, or a better way.Thanks all!
There is no advantage then to do this?The advantage is no transaction costs on the buy and sell for those that want to remain invested.It's actually easier (no paperwork) to sell the appropriate RMD amount of a security, transfer the cash to the non-retirement brokerage account, and then buy back the stock.Fees and changes in price between the buy and the sell might leave you feeling differently.There is one downside though, and that is the need to pay the taxes out of cash instead of the in-kind proceeds.
I did such a transfer myself earlier this year. The process may be, and certainly appears, equivalent to a Sell X shares from the IRA and Buy X shares in the taxable account.There is a page on my Vanguard account that deals with my MRD and I suggest you check that out. First it would be good is your calculation of the RMD agrees with Vanguard. Second the page itself has some helpful information. To get to the RMD page, login to your Vanguard Account, Click on My Accounts and drop down to the menu item "Retirement contributions, distributions, RMD". On that page, click "Required minimum distribution (RMD)"When I did my actual funds transfer, I went to my IRA accounts, selected the Vanguard Fund I wanted to move, Clicked Exchange and continued on. The RMD page will give you a dollar amount and you can enter a dollar amount for the RMD transfer. As I suggested above, when the process was completed in both Quicken and the Vanguard accounts, it appears as a Sell & Buy. To address you specific question, if you transfer $9,600.00 of a mutual fund that closed at $23.09 on the day of the transfer, the number of shares transferred will be 415.764. It does not matte what the price of the mutual fund was on December 31st or any other date. The basis that Vanguard will create in your investment account will be the mutual fund cost on the day of the transfer - $23.09 in this case. As has been posted, you will have taxable income in the amount of $9,600 for the example.
Something to consider for those over 70-1/2 with RMD requirements is an in kind transfer to charity.I am told you pay no taxes on the transfer and can deduct the full value of the amount transferred from current income.It can be an attractive way to reduce tax liability in higher income tax brackets.
Something to consider for those over 70-1/2 with RMD requirements is an in kind transfer to charity.The Qualified Charitable Distribution expired at the end of 2011 but was reinstated (retrocactively) in Jan 2013 (for 2012) and through to the end of 2013. Unless Congress again retroactively extends it, you will not be able to use it for your RMD for 2014.It worked by allowing you to direct your IRA custodian to send all or some of the amount of your RMD plus an additional amount up to $100,000 (in total) directly to a charity of your choice. This way, the retiree doesn't have to declare it as income first....which probably wouldn't matter, taxwise, if the retiree itemizes deductions.....but it would matter if he/she takes the standard deduction.BruceM
It's actually easier (no paperwork) to sell the appropriate RMD amount of a security, transfer the cash to the non-retirement brokerage account, and then buy back the stock.I was going to do this in January with some BRK-A stock. But before I did it, I noticed that the value of the stock I was going to transfer jumped up $500 in one day. Doing a sell + transfer cash + buy leaves an open window where you can miss out on a jump in price. Didn't want to take that chance, so I did the paperwork to just transfer the security.
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