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CMF_Fuskie: "Who hasn't found any articles encouraging retirees to take RMD distributions earlier in the year..."

I have not saved them, but I have seen them.

As you know, RMDs are based upon value of the account as of 12/31 at the close of the prior year.

Those who suggest early in the year RMD distributions are wanting to protect against the account having a bad year, and then reaching December and being required to take out the RMD based on substantially larger prior YE balance.

The counter-argument is that leaving THE RMD in late allows the IRA to grow, and does not affect that year's RMD because it is based on prior YE balance.

For example, assume RMD is 5% and YE account balance is $1M. RMD is $50k. Take it our in early January of next year, and market suffers 30% loss though December 1; account balance would be $665K (.7[$1M - 50k]). If you did not take the RMD early, current account balance is now $700K, but RMD is still $50k, or 7.14% of current balance, and after RMD you have an account balance of $650k, or 15k less than the early withdrawer (assuming that early withdrawer did not take RMD in-kind and continue to hold same assets).

I analogize as similar to those with big Stock option gains who do not sell enough stock to cover income taxes that will ultimately be due, and then the stock drops significantly, making it much more difficult to raise funds pay taxes when they become due.

Regards, JAFO
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