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I transfer the RMD's to my taxable account usually the first or second week in January. My IRA continues to rise in value and the RMD's continue to rise each year. I take the distributions (either in cash or securities) and transfer it to my taxable account in an effort to keep the RMD's low. Since I don't need the money, I let it produce tax deferred income in my taxable account. The taxable account produces more income than I need so much of the income gets reinvested. I usually don't trade or sell so I expect the bulk of the funds will go untaxed and be stepped up in value to my heirs upon my passing.

That's what I'm thinking too. Appreciate everyone commenting.

In the above scenario -- I actually think it could be better to take out 401k funds when the market is DOWN. If you have to take $x dollars in RMD why not get more shares out at lower prices, reinvest them quick and have gains taxed at capital gains rates instead of at higher marginal rates?

Selling lower is not good if you need to spend the RMD to live, of course.
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