Taking your required minimum distribution (RMD) typically means selling investments, paying taxes and keeping the cash. Time to think outside the box?
But as we move further into the back half of 2022, where to go for RMDs may be murky. The broad U.S. stock market has fallen, and so have bonds. Unless you maintain dedicated cash holdings to meet RMDs or you’re spending your IRA holdings’ income distributions to satisfy your RMD requirements on an ongoing basis, you may be scratching your head about where to go for this year’s distribution. Rebalancing opportunities probably won’t beckon, and you may not want to disrupt your IRA holdings when they’re down.
That’s where in-kind distributions can come in. They won’t help you reduce your tax bill; your RMD-related taxes are already cooked. But assuming you don’t need the RMD for living expenses—a big assumption, especially in this era of high inflation—a transfer in-kind of securities from your IRA to a taxable brokerage account may make sense. Not only can it help you maintain the same market exposure, just in a different part of your portfolio, but the transfer may also reduce the taxes due on future appreciation when you eventually do sell.By Christine Benz read the full article on Morningstar.com
I’ve always taken my RMDs in kind since I turned 70 1/2. I then top up the distribution with a small amount of cash to meet the minimum required distribution. And I’ve always deposited estimated taxes quarterly using EFTPS. Works great for me.