Reddit Posts
Do I need a FA to get my annual RMD from an inherited IRA?
Advice needed on portfolio management choices
Xiaomi assets equals dept to the precision of last stated digit in Q2 2023
40y/o, 52k in my Roth IRA split between $36k in FSKAX, 6.5k in Microsoft 17.5k Tesla and about 7k in “cash available to trade”. Should I go all in on Tesla?
How are Required Minimum Distributions paid out when the funds are invested in stocks?
Ray Liotta died in his sleep at age 67. He probably had a heart attack. If he had a heart attack, it was probably caused by undiagnosed sleep apnea. Sleep apnea affects close to a billion people worldwide and goes undiagnosed in 80% of cases. Save lives, long Resmed (RMD).
Ray Liotta died in his sleep at age 67. He probably died from undiagnosed sleep apnea. Save lives, long Resmed (RMD).
Ray Liotta died in his sleep at age 67. He probably had a heart attack. If he had a heart attack, it was probably caused by undiagnosed sleep apnea. Sleep apnea affects close to a billion people worldwide and goes undiagnosed in 80% of cases.
Does Government's Forced Rothifying of Catch Up Contributions Change The Conventional Wisdom About Roth's In Your 20's?
Sleep stocks, specifically sleep apnea stocks, will do quite well the next decade.
Sleep stocks, specifically sleep apnea stocks, will do quite well the next decade.
Sleep stocks, specifically sleep apnea stocks, will do quite well the next decade.
Sleep stocks, specifically sleep apnea stocks, will do quite well the next decade.
Sleep stocks, specifically sleep apnea stocks, will do quite well the next decade.
Sleep stocks, specifically sleep apnea stocks, will do quite well the next decade.
Sleep stocks, specifically sleep apnea stocks, will do quite well the next decade.
Sleep stocks, specifically sleep apnea stocks, will do quite well the next decade.
Where's my snorers at? The bullish case for sleep apnea stocks.
Why is no one talking about RMD? Almost up 13% in the last week alone
RMD is gonna Rise. Recall Immenent for Respironics.
The Initial Stock Challenge: Search for the stock with the same ticker tag as your initials.
Mentions
And also if your kids inherit it, they wont be subject to RMD or income taxes
If RMDsbstaryed for your Mom, you appear to notbqualifybfor exceptions (age and ability), you first need to assure your Mom took the required RMD for the tax year or the year of her death. If she had not fulfilled that obligation, then you need to make withdrawals that account for her RMD for that year. The following 9 years you need to take the required/calculated RMDs in each of those years. In the 10th year, you need to drain/empty the account. All RMDs and withdrawals you take are taxed as ordinary income. There is NO 10% penalty for any RMDs or withdrawals regardless of your age. One solution to the RMDs in a calendar year is to offset them with increased contributions by the same amount into your and/or your spouses 401K (assuming you have them with room left to deposit more into them - based on your age, you may qualify for increased "catch-up" 401K contribution limits).
1) selective pattern based trimming thru covered calls, (2) redistribution to other evolving themes in AI to broaden base, (3) RMD, required minimum distributions will be the biggest, (4) Beach House
As long as you get the max match from your employer the rest is personal preference. Sounds like you're doing the right things. The more Roth you have the less you'll worry about RMD's. It's also probably more tax you'll pay but that's debatable.
>To add a little more context, no distributions were made that i know of from my parent. They died prior to RMD would have been required (mid 60s). The owner (parent) of the Roth IRA would not have had an RMD requirement. >Vanguard seemed in a polite but clear rush to get me to liquidate the account. Not surprisingly because this situation has had a lot of time pass by from the account holder's death to the beneficiary receiving the account. >I guess if my long term plan is keep it invested, the best I can do is contribute to 2025 Roth IRA, the balance to 2026 Roth IRA If you otherwise qualify for a Roth IRA for 2025 and/or 2026, then you can use the Inherited Roth IRA distribution to fund those, yet. > and await the penalty/tax bill? Does that sound wise? Yes, I'd take 100% distribution by Dec 31, 2025, and submit a penalty waiver request from the IRS and just move on in life until/unless you get a letter from the IRS regarding the matter.
Thank you so much for your detailed response. So it sounds like I must liquidate, calculate what i would have taken as RMD and figure out from their the tax burden/penalty. To add a little more context, no distributions were made that i know of from my parent. They died prior to RMD would have been required (mid 60s). The other beneficiary was a sibling, in which they got 50%. They also did not know about the account previously. They are a few years older then me, but both of us are under 50. Vanguard seemed in a polite but clear rush to get me to liquidate the account. Understandably, they refused to offer any guidance on what/when/how i should distribute the funds. I guess if my long term plan is keep it invested, the best I can do is contribute to 2025 Roth IRA, the balance to 2026 Roth IRA and await the penalty/tax bill? Does that sound wise?
u/RickJamesBoitch, I'm including some edits to my responses. My earlier assumption was that if/when the IRS granted a penalty waiver for the missed RMDs, you could continue on with the lifetime 'stretch' distributions. However, that does not appear to be the case, as the statutory "5-year" clock continues to run, even if you were unaware of the existence of the decedent's IRA or the IRS granted a waiver. So the situation appears to be... [https://www.morningstar.com/retirement/tricky-timelines-if-you-miss-an-rmd](https://www.morningstar.com/retirement/tricky-timelines-if-you-miss-an-rmd) **Cynthia Example** The IRS has a special regulation covering the situation where the RMD is 100% of the account: In that case, if 100% of the account is not distributed by the end of that year, 100% of the account continues to be the required minimum distribution for penalty purposes for every year thereafter until it is actually distributed. \-- * 2015 : year of death * 2016 : beneficiary RMD, based on LEF * 2017 : beneficiary RMD, based on LEF-1 * 2018 : beneficiary RMD, based on LEF-2 * 2019 : beneficiary RMD, based on LEF-3 * 2020 : no RMD required due to pandemic relief * 2021 : beneficiary RMD = 100%, due to the 5-year clock rule * 2022 : beneficiary RMD = 100%, due to the 5-year clock rule * 2023 : beneficiary RMD = 100%, due to the 5-year clock rule * 2024 : beneficiary RMD = 100%, due to the 5-year clock rule * 2025 : beneficiary RMD = 100%, due to the 5-year clock rule
If it is in an IRA, no worries about value on date of death for tax reasons... No taxes for you. However, it will be of interest to the person handling the estate that the RMD for the year of death has been satisfied. If in an after tax account, you need to get a valuation of the stock on the date of death. You are correct in that the taxes are only in the gains since you acquired the stock.
You need a good tax pro. This happens all the time. The real problem you have is: in order to use life expectancy (the old rule before 10 year rule), you had to take the first RMD before Dec 31 2016 (in your case). If you don’t take the RMD, then Uncle Sam expects you to close the account in 5 years. Anything after that is 50% penalty. There are other questions, like where there other beneficiaries that might have satisfied the RMD etc. Basically talk to a tax pro. Ask specifically if they have worked with someone about an inherited IRS they were unaware of (this shouldn’t be their first rodeo). Keep asking until you find one that has done it several times. Ask direct questions. Make them lie to you if they are being vague. Best of luck.
>I don't have any access to the previous account balances, I could roughly calculate based on share price of the assets as of year end. Is the calculation the stretch 'rmd' amount as of 12/31 each year? Yes, it is the account balance on Dec 31 divided by your LEF. You subtract ’1’ from the LEF each year. >Wonder what the penalty would be doing it that way vs. liquidating it now and paying the penalty on the full amount? I’d calculate the RMD for each year, to the accuracy you can determine, and then compare that to how much is left over and how many years remaining to fully distribute the account (when the LEF reaches 0, basically). >Can I just withhold 25% when doing the liquidation? Do you mean 25% for the penalty? No, I would not do anything with the penalty until the IRS says you actually owe it. They might approve the waiver and you’d owe nothing in tax or penalty.
Thank you, they passed away before RMD.
Since the parent passed away prior to the Jan 1, 2020, implementation of the SECURE Act you should be grandfathered in to the older rules. That should be the case, even if you only recently became aware of the existence of the account because it goes by the date of death, not receipt of the account by the beneficiary. A non-spouse beneficiary of a pre-SECURE Act Roth IRA was required to take 'stretch' RMDs over their Life Expectancy Factor. This means you have missed several RMDs: * 2015 : year of death * 2016 : first beneficiary RMD * 2017-2019 : ongoing beneficiary RMDs * 2020 - no RMD required due to pandemic relief * 2021-20XX : ongoing beneficiary RMDs **Has the Inherited Roth IRA been established in your name?** If so, my thoughts would be to maybe consider filing a penalty waiver request with the IRS and to take all of the "missing" RMDs for the prior years. In order to do that you'd need the Dec 31 account balance for each of those years, which you may or may not have access to. [https://www.kitces.com/blog/fix-rmd-missed-forgotten-miscalculated-corrective-action-form-5329-penalty/](https://www.kitces.com/blog/fix-rmd-missed-forgotten-miscalculated-corrective-action-form-5329-penalty/) [https://www.kitces.com/sample-letter-of-explanation-for-missed-rmd-penalty-relief-alongside-form-5329/](https://www.kitces.com/sample-letter-of-explanation-for-missed-rmd-penalty-relief-alongside-form-5329/)
Sorry for your loss. Inheriting a retirement account is a silver lining, but still tough to go through. Once you take the distribution it's just cash that you can do whatever you want with. So you can take the $10k, minus tax withholdings, have that $$ parked somewhere for the next few weeks, and then make your Roth contribution at the start of the year. **That is assuming you have $7500 of earned income next year.** IRA contributions can't be less than your annual earned income. > Would it make any difference if I withdrew from the inherited IRA now in 2025, or wait until 2026? To be clear, not knowing your age or your sibling's or all the specifics, this IRA isn't subject to RMD's is it? That would be the only thing to look out for. Personally I think it's probably best to spread the distributions out as much as possible, so taking a chunk for 2025.
Yes, you can make a Roth contribution with it and a very smart move. I think they mean you can’t roll another pre-tax account into it. That’s because of the RMD schedule.
She is 72. RMD is 10 %. Mandatory.
Yea just because IVs low doesn’t mean spx options still aren’t pricey lol. Look how far you had to go otm with only a months worth of time duration for it to be 4k. 6880 like OP has are 10k a pop at the January expiration. Time decay is also a mother fucker for spx, like you’re always looking at like 2-500$ worth of decay anything <60 days duration for spx. But I do agree though that if you’re gonna go buy an option it is cheaper when IVs low. I would want to see what GEX looks like on SPX over several strikes to maybe get a better idea of where we’re headed especially when we’re close to the end of the year what with end of year accounting and RMD season for the rich retired boomers.
Good for a short term 1-2 year patch…so I can fulfill this yrs RMD w/dividends only per plan
My grandparents left $500k in an irrevocable trust. There are four trustees. Required minimum distribution is based on the age of the oldest trustee. It’s split 25% to each of us and we get a check every December. We can change nothing, my grandpa was a business professor and the trust is airtight, and managed by a private office that takes too much in fees. But his descendants can never squander it as the investments are locked in and we receive only a small RMD.
It doesn’t really matter financially, but rolling it over early gives you time to fix any paperwork hiccups long before your first RMD deadline. Waiting until the last weeks of the year just adds risk with zero upside.
Then do non sizeable. There is a non zero amount that makes sense for every situation. When you hit RMD age, the choice will be out of your hands and terms will be dictated to you. Find a trustworthy pro to do some financial planning. Unless you spend all of your income, you likely should be auto investing also. Best of luck.
I'm pretty sure it wouldn't make much sense to do that. You could always talk to a professional. If she had a retirement account she would already be subject to RMD (Required Minimum Distributions). There might be some slight advantage to the heirs if she set up a Roth, but there are a lot of limits as to how much she would ever be able to put into it. Sounds like she has plenty of money. Perhaps, consider investing some, but really it depends on what she wants to do. Sounds like someone who never wants to retire so ...
Re: violations. You may find this helpful. [https://www.fidelity.com/learning-center/trading-investing/trading/avoiding-cash-trading-violations](https://www.fidelity.com/learning-center/trading-investing/trading/avoiding-cash-trading-violations) \[Also retired, age 66, and not yet taking SoSec\] Not quite sure how you'd get $72k tax free, but that's not important. I've been doing substantial Roth conversions since the year I went on Medicare (just last year), and will continue to do so until I draw SoSec. Want to dwindle down my traditional IRA and then plan to utilize QCD to offset RMD. Not just for the benefits of Roth v traditional, but to try to avoid, as best as I practically can, SoSec taxation. That's \*not\* easy!
Yeah no need to take additional risk at this point if he doesn't even currently need the RMDs for living expenses. If the 403(b) is around $1 mln, then you're talking about a first year RMD of around $37 - $38k. Put that in SGOV it'll earn probably around 3.5% ($1,300-ish) in the next year.
I'm not panicking, and I'm not repositioning ... ... BUT I DO find November immensely **frustrating** so far. 1 day up, 4 days down. 1 day up, 6 days down. 1 day up, another week down. Overall, my combined portfolio is down about a quarter of a million dollars from its recent high. I wish that the Powers That Be would pick ONE policy and STICK WITH IT for more than two weeks. It'll come back, because it always does. Don't know how long it will take. And at this rate -- if nothing much changes between now and 31-Dec -- I will **not** have to tweak my RMD for next year after all! (I was just starting my "investment journey" during the Arab Oil Embargo, so I've seen it all, and can live with it. But it's still frustrating as hell.)
Sounds like the big oops here is letting that inherited IRA just chill in cash while the RMD timr keeps screaming at you, which just piles on the stress and guesswork. And trying to use long-trm strategy for a short-term squeeze is kinda like bringing a camping tent to a lighting round, funny, but not helpful. What’s scaring you more right now, the tax hit or pickig a spot for the leftover cash and instantly regretting it?
I have 1.5 in total retirement savings between my 401k and rollover IRA accounts, plus another 200 in an inherited IRA that I need to take a RMD every year. This last account I received before 2016 so the 10 year max period doesn't apply as I'm grandfathered into only a yearly withdrawal until my EOL. My asset allocation was roughly 60% large cap, 10 percent medium,10 percent small, 5 percent international and 15 percent bond, all indexes, plus a small amount of random dividend king stocks I fucked around with, plus some 30 year corp bonds paying 5.85% coupon with about 25 years until maturity. I transfered my large cap stake from 60 to 35 to the bond fund. I still have a lot of market exposure, but I wanted to do asset preservation at this time. No significant debt, as I have about 7 years left on a 30 year fixed mortgage that I have been paying extra principal on every month.
RMD is orthogonal to the 4% rule. Also I’m not saying people don’t vary their withdrawal rate. I’m just saying that the discussion defaults to a static rate (be it 4%, or 3.5% or whatever), and I argue that the default concept should be a variable rate.
So the default course of action if you are just under the 10 year rule with no specific RMD amount required, would be to take out 1/10th the first year, 1/9th the 2nd year, etc. To spread out the tax liability. But that depends on the amount involved. If it's a large amount, that spread-out distribution schedule is probably what you want to do. If it's a small amount, maybe you take it out faster if you can do it without screwing yourself on taxes. As far as what to do with the money you take out, if you don't need it to pay for living expenses, just treat it as if it's a boost to your salary and invest it accordingly. As for the money that stays behind in the IRA, I wouldn't treat it any differently than if it was a regular investment account. Just because you have to empty it in 10 years doesn't mean that much if your relatively young. Example: You put all of the IRA assets in stocks. Some years, when you go to take your RMD, and you go to sell some, sometimes they're up and sometimes they're down. Years they're down, you'll be paying less in taxes, and you take the cash and plow it right back into the same stock in a different account at (presumably close to) the same price.
Start by investing the funds in the inherited IRA (mine came already invested but I the choices made didn't work for me, so I sold and reinvested almost everything). In most years, sell shares, take out the minimum RMD + enough extra to completely fund my Roth IRA and pay the taxes, if extra is needed. If the RMD is going to be more than needed for my Roth IRA + taxes, I invest the remainder in my regular taxable brokerage account.
There is a point when it's no longer beneficial to contribute to your pre-tax 401k. You'll need to do the calculation since it's a function of your tax rate. Basically, if your (projected) pre-tax 401(k) account could get too large, RMD would become so much that you would end up paying more tax when you take money out of your 401(k). At that point, it's better to pay the tax now via Roth. At a younger age, you can also use a Roth contribution as your emergency fund, taking advantage of more time in the market. You can always take out the Roth contribution anytime when needed. Most financially savvy people save 6+months of spending in HYS. I would put all that in a Roth account.
Nothing but passive index investors via primarily target date funds in retirement accounts holding this market up. This trend should continue only to be reversed potentially by baby boomers moving into fixed income and forced RMD selling in their early 70s. But make no mistake equities are at nosebleed levels. NVDA is worth more than the total German stock market, for example. But this market is a well supported Ponzi scheme. Continued irresponsible deficit spending at $2 trillion annually with no restraint in sight should also extend the ponzi by further trashing the dollar - typically a positive condition for equities - and providing further unpaid for stimulus preventing a major recession.
This is a reasonable approach. Nobody knows what tax rates will be in 2050, but considering that tax rates are currently at historically low levels for the US, even a reversion to the mean would suggest they are going to go back up, at least a little, and maybe a lot. In 2000, the lowest bracket was 15% and it jumped into the 30’s quickly. That looks painful for a traditional RMD real fast if those kind of brackets come back.
Another example I just thought of is we may be able to donate money directly to charity once we hit the RMD age. It takes it off the top, do not have to be above the standard deduction, from what I understand.
Yes. There's some nuance for those fortunate enough to have an employer with mega backdoor roth contributions as an option and enough income to fund deferrals and after tax contributions. Also consider Social Security/other earned income in retirement years may put you in a higher bracket no matter what if you have a large pre tax 401k/IRA balance when RMD age kicks in.
There’s no 100% tax bracket, a bit over isn’t going to make a giant difference. But if it is an issue you can always do a QCD for your RMD.
So I have an inherited Ira I withhold 20% of every RMD. It probably needs to be 25%. Lord help me if I go into the next tax bracket. If I’d inherited a Roth I’d be paying no taxes on it
You sure did ask a lot of questions then... As far as the model goes, all of the math is right there. The only inputs are your age to calculate how long the money will compound, the rate of growth and the starting balance. The math does not account for additions or subtractions along the way and once 75 ( not everyone's RMD age, btw ) only accounts for subtractions of the RMD from the balance. Art
are you working until 75? when are you retiring? what's your projected expense? Are you not spending any of the $1M in IRA until 75? When do you plan to take SS? How much do you need to take out from IRA to support your lifestyle? If RMD may be a problem, would it make sense to spend more money earlier?. You can't do Roth conversion planning in isolation out of concerns about taxes alone.
The RMD is calculated by taking the start of the year balance and either dividing by a factor or multiplying by a factor that is essentially the reciprocal of the factor. The factor goes down every year ( reciprocal goes up every year ) and you are forced to withdraw increasing percentages yearly from your balance. The trick is to figure out what your IRA balance is likely to be when you hit 75. The market is highly variable depending on what your invested in and how many years till 75. This spreadsheet attempt-to-share is simply a toy to help get an idea of a potential age 75 balance and a peek at what the RMDs might be. If your balance at 75 is around a $1M or so at 75, the RMD will start at $40K and at 85 have gone up to $80K/year. Unless you have a lot of other income, this is a great place to be tax wise. On the other hand, If you have $1M at 55, even without contributing another dollar, the balance is likely to get out of hand by the time you are 75 and if you try to convert out of your balance, at some point just converting the growth year to year can kill your tax rate not to mention not reduce your IRA balance. The entire point of my post and the spreadsheet was to remind people who have larger IRAs to take a look at future balance projections. Even those who have smaller IRAs, and are young and actively contributing their IRAs should look at their projected balances. It is easy enough to model how the balance will grow with yearly contibutions. Paul
Just eyeballing this, looks like you are just calculating the RMD based on age, starting value and expected growth rate. But to decide whether it's optimal to convert (and how much) or to wait, you would also need to factor in tax rate (which would also be impacted by non-retirement funds). I have this same question and have been meaning to try to work something up to help decide.
You only do Roth conversion if your tax rate is favorable when you do it. Doing it during your high earning years because you're afraid of RMD is worse. And in my experience, the kind of people who panic because they just found out about RMD tend to fall into the group who don't really understand the ovearall tax strategy of retirement accounts.
My health insurance is up nearly 50% in the last five years. I’m sick of subsidizing the ACA. Why do we always get stuck paying the bill? The lower class pay no income taxes and basically get discounts and subsidies on everything from food to their utilities bills. The wealthy well they don’t really have to pay for anything as they don’t really have income therefore they basically pay taxes out of their RMD’s. This healthcare nonsense has to end. Stop making us pay the health bill for the obese McDonalds eaters who don’t take of themselves and scream “Free Free Free gimme everything for Free!”
Yes but if you manage the mix properly your 401k RMD might below your spending needs
RMD age will be 75 years old if you’re born after 1960
There are two ways to get income in retirment. sell shares. Or invest for income. If you are selling shares you want to sell from the account that has the highest future teax liability. When you are talking about 401K and ROTH there is zero tax liability in the Roth. For the 401K you have Required minimum distributions (RMD) which is the government mandating you sell a certain amount regardless of you need for the the money. Which is in effect a mandatory tax. For taxable brokerage account all activity in the account is taxed each year. With 401K and Roth there is no tax on activity in the account. SO you do the following: 1. Sell from the taxable account first to minimize yearly capital gains or dividend taxes. 2. Sell from the 401K so that you minimize the RMD later in life. When you liquidated the taxable and 401K all that is left is the roth which is not taxed. on activity in the account or withdrawals. Either way with the liquidation rout there is a chance that you willl run out of money before you die. So you have to manage your withdrawal rate every year to insure you don't run out of money and become homeless with no medical care. Now as i mentioned aarlier there is a second aproach which is to invest for income. government and corperate bonds and dividend from funds or companies deposit money monthly or quarterly. And you are not selling anything. So in theory you will never run out of income. And if you select good investments the market could crash like it did in 2008 and 1930 and still get income. The Book The Income Factory is a good guid on this investment style. Armchair income on you tube is a good supplement to this by reviewing funds that can be used to build a income factory.
This is really a tax simulation. First, you have to decide whether you want to minimize taxes during your lifetime or minimize taxes for your combined lifetime and heirs. Second, you need to think of taxes during RMD phase since that's the time you will potentially have the highest income. For example, if you are 50 right now with 1 million pre-tax and live off taxable accounts to achieve 0% tax early in your retirement, then by the age of 73, your pre-tax could be 5 million. The RMDs would be significant and put you in a high tax bracket plus you will be subject to IRMAA. Between the time you retire and the time you start withdrawing SS will be a key time. This is a time where you could potentially have the lowest taxes. It most likely will not be optimal to target 0% taxes. You're going to want to fill out the lower income tax brackets. At least fill out 12% income tax bracket with Roth conversions. There was a time when ACA subsidies were significant but as of 2026, the ACA subsidies are small relative to your assets. It would require you to keep your income super low. The opportunity cost of achieving ACA subsidy would be that you would be giving up the lower income tax brackets. I have done simulations similar (but with 2 million in pre-tax) to what you are suggesting and it would be better to do Roth conversions than to attempt to get ACA subsidies. There are a lot of details you need so I recommend you run the numbers yourself.
Depends on each retiree’s particular case. For me, it makes sense to withdraw from Traditional 401k first in order to cover living costs and reduce future RMD size.
Factors you want to consider which ultimately leads to “what’s my tax rate if I do xyz?” - how much income are you expecting? If you have other sources then maybe that will be enough - what’s your tax bracket? If your tax bracket is low then you want to consider start converting your 401K to Roth slowly. - you’re paying the income tax now rather than getting caught with a RMD at 70 with a big ass forced withdrawal - if you have 1M now and you’re what? 50? That’s could get to 2 or 3? Then your first RMD maybe be like 80K for the first year. - Roth is usually the last account you want to touch. So Brokerage to use, 401K to convert if you have capacity, then finally Roth
> I do not plan on taking out while working but on retirement being in a lower tax bracket You have that freedom with *your* IRA, like one that you have opened yourself, but *not* with an IRA that you inherit. There are some exceptions to this, but most likely, if you inherit someone's IRA you have 10 years to cash it out completely. If RMD's have kicked in (starts when the original owner is in their mid 70's) then you are also forced to take *at least* a specific amount every year. That is my current situation; I inherited an IRA last year, have a minimum I need to cash out every year, and 10 years total to cash it all out. Given that every time you take a withdrawal it adds to your ordinary taxable income for year (i.e. on top of a job you already have), it's very easy for tax brackets to creep up, and between federal and state 20-30%+ can go to taxes. This is where Roth IRA conversions are worth considering, as when you inherit one of those there is no tax burden as you cash it out. You may want to consider talking with a financial professional about all these possible outcomes. Or more so, your mom should, since it's ultimately only a decision she can make about her accounts and finances.
Don't have it yet, but I expect to receive a sizeable inheritance in the next few months. It's enough for me to live moderately comfortably for 5+ years in a LCOL area. Similar portfolio value. Plan is to retire early and live off the cash/interest while doing Roth conversions up to the 12% bucket, maybe even the 22% bucket. Will delay SS for a few years to maximize the dollars that I can convert at the lowest marginal rates. With any luck, I'll be able to live exclusively off SS and a small pension indefinitely. Once I hit RMD age, will probably transfer most of the withdrawals to my heirs or put it in brokerage accounts for their eventual inheritance/retirement. Will depend on how well they are able to manage money in their 20's and 30's. Will reevaluate my plan every year.
Just did this for my grandfather. We recorded all stocks and prices at the time of his death. Then we sent proof of death to his brokerage along with the will and my dad’s proof of being the executor of that will. The money was split between a normal brokerage and a IRA, the money was split up according to the will and transferred to the beneficiaries in their preferred way. Some wanted it liquidated, some wanted the stocks with a step up in basis. They were able to keep their amounts that were in the IRA in an IRA but they instantly had RMD’s they’ll be paying out for the next 10 years.
i put as much as I can into my Roth 401k because of Required Minimum Distributions (RMD) that applies to regular 401ks. I just put the company match amount into my regular 401k, and the rest into roth.
So I just spend a few nights running through a Roth and trad analysis. We went a little deep than conventional wisdom on it (tax rate now vs when you retire) and went well deeper into late retirement and estate. My advice is get out and excel sheet and work out the scenarios because it’s more complicated than “I’m retiring at 65”. Since you have 1M in pretax, you may have similar assumptions variables as I had. High levels: - everything you already heard to death. Traditional (calling it T) pay taxes at distribution as income. Roth (R) pay tax at current rate and gains tax free - R is tax free and not subjected to distribution rules after 65 - T there is an RMD to consider at 73 (75 after 2033) - additional variable to consider “how much is my pretax lump sum 10 years after retirement” - current rate is about 1/24 of your lump sum to be distributed 75 - if you’re in a scenarios of accumulating to 65 then modest retirement withdraw until RMD then you could be looking at a pretty high tax bracket. - there’s an additional benefit to consider then which is Roth is not subjected to rmd and there are benefits to convert at the RIGHT TIME…if you’re in a period of reduced income then you can do a conversion at a lower tax bracket. Basically it means you need to do in-depth research or seek some consultation and plan it out because….its actually pretty complicated…you’re in the mo money category now.
Since you don’t need the RMD, maybe think about doing a Roth conversion to lower future RMDs + taxes. You could also pay off your mortgage early or put it into low-risk stuff like Treasury bonds if you’re not into risk. I’ve been using the services from [https://q3adv.com/](https://q3adv.com/) for retirement planning. It helped me with tax strategies like Roth conversions. Check it out if you want
Since you don’t need the RMD, maybe think about doing a Roth conversion to lower future RMDs + taxes. You could also pay off your mortgage early or put it into low-risk stuff like Treasury bonds if you’re not into risk. I’ve been using the services from [https://q3adv.com/](https://q3adv.com/) for retirement planning. It helped me with tax strategies like Roth conversions. Check it out if you want
Question. I inherited a stellar portfolio held in IRA's. Since I need to start my RMD's this year I have to either sell and choose what to do with the cash, or do an in-kind transfer. Since the in-kind transfer resets the cost basis anyway, would I not be more or less "buying (back) in" at the top? The total value of my assets are more or less the equivalent of a solid but conservative retirement fund and I am not far from retirement age so of course I am seriously concerned about a significant downturn. On the other hand, for the same reason I'd like to keep a return coming. Any suggestions.
you can find a fee for service fiduciary. i pay 8k per year. she is a cpa, and does financial planning. meets about 4 times per year. i am newly retired <1 yr. big issue for me was to reduce taxation from RMD's . wanted a second set of eyes on doing a back door ROTH.
My father passed spring 2020 so yea I am required to RMD. The first couple years I didn’t but in 2024 I played catchup and took 4 years at once which resulted in owing lot of taxes.
>I don't want to pay extra taxes in the next 10 years on anything I gain there. Forget everything else and focus on this statement here. What do you mean by this. Let me give you a concrete example. You have $100k in it and you invest it into *anything* you want. By the time you have to take RMD, two scenarios can happen: one, it stays at $100k. two, it grows to $200k. What do you think is better? This is a purely math question. Which do you think is more, $100k after taxes or $200k after taxes?
Default security sales are usually First In First Out. So assuming you held 100 shares of a stock that you bought 10 a year of, over 10 years, the securities bought in year one would sell First. This can normally be changed however. If you're trying to avoid realizing too many taxable gains, Last In First Out would sell the securities purchased in year 10 First. Assuming the stocks appreciated more over time, you can recoup your capital and minimize your tax bill this way. The IRA should follow a 10 year RMD rule if you're a qualified beneficiary. If you inherited it this year, for example, you have to pay income tax on all the proceeds (earnings and principal) and you must withdrawal everything by 12/31 of 2035. Where it is invested is dependent on your risk tolerance, but you may want to plan out withdrawals over the next decade so that it doesn't impact your tax bill adversely in the last year.
Use a bucket approach: lock in 10–15 years of withdrawals with safe ladders, keep the rest in a balanced stock sleeve for growth. Math check: $24k from $420k is \~5.7%; for a 15‑year runway that’s workable if you time-segment. I’d do 2 years in T‑Bills/HYSA (\~$48k), a 5‑year Treasury/TIPS ladder for years 3–7 (\~$120k), and years 8–15 in intermediate Treasuries or a small period‑certain SPIA/MYGA (\~$168k). Put the remaining \~20–25% in a broad stock index (US total market + some international). Spend from cash, roll the ladder annually, and only refill from stocks in good years; in bad years, refill from bonds. This cuts sequence‑of‑returns risk while still letting a growth sleeve compound. Mind the 457 tax angle (likely no early penalty, but withhold taxes), and revisit the mix yearly so RMD timing at 73 doesn’t blindside you. I’ve used Vanguard LifeStrategy Income for the growth sleeve and Schwab’s CD/Treasury ladder tools for years 1–10; added a small MYGA via [gainbridge.io](http://gainbridge.io) to lock a fixed rate for years 11–15. Bottom line: match the first decade-plus with safe ladders/MYGA and keep a \~40/60-ish stock/bond sleeve to grow the rest while pulling $24k.
Look into the possibility of incremental Roth conversions, especially for this year and next few years while staying at lower tax bracket. With that much in those 2 stocks, I think you need to prepare for a hugh tax bill comes RMD age, high Medicare IRMAA (medicare surcharges for Part B and Part D), taxes on 85% of your SS benefit amount especially beginning with your RMD age.
I have my mom taking her RMD's and putting them in her brokerage account because she doesn't need the money, but has to take it out. After that, I do a Roth conversion up to the point of where going over a certain amount would result in taxes. She doesn't have a lot of money saved, but her SS check is enough because she didn't claim SS until she was 70. That's the only thing keeping her out of the poor house besides living with me. I'm just making sure she keeps what she has and if she doesn't need it, then my siblings and I can inherit it. I do remind her that she has some money and that she should enjoy it first. The rest of us will be fine, so I'm not trying to grab an inheritance from under anyone. I might be able to get her to finally spend some of it on herself this year too. That will be good for her.
I had one lucky period of time from 1994 to 2000 where I had 90% of our portfolio in one stock that went up 100 times. That resulted in a strong base to grow from for the next twenty years to retirement. In 2000, I switched to commodities like oil, natural gas, electricity, gold and silver and rode those for a while. We retired in 2000 (I was 61) and have the problem of how much to convert from non-taxable to taxable before RMDs. One of the issues is that Social Security covers most of our living expenses and we need to convert several times that per year to avoid huge RMDs whenever the RMD age hits. It is also difficult to spend your money when you've been frugal all your life.
True. Our pensions more then covers our expenses and some extra travel. Wife (65) will begin SSA soon which will be some extra funds to do more traveling We do still have about $300,000 in treasuries in a taxable account That can easily last us 10 years or more. Wife just bought her a Lexus ES350 so we used some. 😂 We are converting my wife‘s tax deferred monies ($600,00) now but only adding to the max 12% tax bracket. During RMD’s we will be in 22% tax bracket so not much benefit to go over 12% now. I‘ll roll mine into a rollover IRA as soon as I can To get it out of empowers hands and convert some as It fits into the tax bracket However we will concentrate on hers first since her RMDS start sooner then mine
single best way to reduce RMD taxation when you are 73+ if it lasts...
Starting RMD next year. Created bucket of cash & short term bonds for 3 years of RMDs and over all 60/40 as usual.
The big factor here is the rules on inherited IRAs and not about moving the market. You’ll have required distributions, which means you can’t just let it sit forever. Selling everything now locks in today’s price, but knowing your RMD schedule helps you plan instead of rushing. Maybe have your custodian walk you through what that looks like.
If they are in a retirement account then you don't have to worry about gains. Keep the proceeds within the retirement account. If they are in a taxable account, compute capital gains and liquidate over a number of years to stay in the tax bracket your targeting. Probably the 15% bracket. Keep in mind if your inheriting retirement accounts and your not a minor, then you probably have to fully withdraw those in 10 years. Roth is no problem you could wait until near the end and remove most of the assets, but an IRA, you'll need to divide the assets over those years and make quite large withdrawals each year. To levelize your income tax bracket. Keep in mind both Roths and Traditional IRAs may have RMD requirements on inherited funds. So learn what those are.
Correct. Roll to an IRA, and I would be rolling to a Roth up to the tax bracket amount for the AGI. My 401k has a Roth option, so hopefully you have some of that in a Roth. OP needs to look at taxes, and what the RMD will eventually do.
Your plan seems sensible. If it were me, I would figure some cap on the 25% you are keeping in second HYSA account. Once that cap was met, I would maintain the ratio on the other two destinations, i.e. 66% VTI and 33% to your individual stocks. Regarding your individual stocks, I too keep a few stocks outside my main plain, i.e. SP500 index, direct indexing, etc. The amount in individual stocks is not a fixed percentage but a number that I Am happy with. If you are finding your varying risk portfolio is keeping up with VTI, I would keep up the monthly percentage. If not, or if you get bored with playing around with those stocks, reduce the exposure to that portfolio group and increase the VTI portion. Regarding the 3 month check, this is something I have never encountered as I have always been self employed and have never received a paycheck. You can look at this one way... You save $4k/month - does not matter what your income is, or if the $4K simply income-expenses = savings, then feed the 3rd paycheck into savings. As you are asking this in an investment forum, I suggest run the extra check directly into your savings plan. Good luck with your financil plans. Only in retrospect is there a "correct" move. Some seem sensible, some seem foolish. Your's certainly seems sensible. You don't mention your retirement savings or plans. Project out your RMD requirements and make sure you don't force yourself into an obscene tax bracket. - There is a piece of unsolicited advice. One I wish I had received many years ago. Art
The 401k isn’t forcing her to rollover? There must be high fees to justify this. That is robbing next generations of wealth. 400k cash, then conservative portfolio’s: why?? She is obviously just taking RMD’s. Will likely never spend the Roth. Move the Roth to sp500 at the very least. Make sure all the beneficiaries are set up. Make sure the deed on the house bypasses probate. Way under invested. No big deal for her, she is obviously living well beneath her means. Just shorting her heirs though.
1) What is the nature of their relationship with ResMed? *(A lot of people have been speculating on some kind of $RMD buyout or partnership in the future. This can cause more harm than good in the long run if people start investing with unrealistic expectations.)* 2) Status update on $20M share buyback program? Also, how can they can afford to do this with multiple drugs in the FDA approval and clinical development pipeline? *(If the company set this up with no plans to act on it in the near future, they should let their investors know.)* 3) Did they apply for the Commissioner’s National Priority Voucher Pilot (CNPV) Program? *(Any indication they at least looked into it is a good one.)* 4) How does Incannex Healthcare, Inc., anticipate handling manufacturing or distributing their products upon approval? *(Long-term planning question.)*
There are a lot you need to learn. Stepped up basis, RMD of your parents' IRAs, index funds. All the reading material is right there on the sidebar.
I’m in this boat right now. I decided to take the initial amount and divide by 120 months. This is a bit more than the RMD but provides a nice monthly income. I’ve taken 6 months out and the Ira has still grown 50000 on top of what I’ve taken out. May readjust next year because the 10th year you don’t want to have a giant amount to pull out due to taxes, remember that it’s taxed as income so look at your tax bracket to make a decision. Good luck!
Ask chat gpt - actually really helpful with these kind of questions. I would stick with Merril - they are solid and will put you in good investments. You will probably want to ask them if you should withdraw the RMD amount years 1-9 and then year 10 all the rest (good for growth, but probably put you in a higher cap gains tax bracket for that last year) or just withdraw 1/10th every year to spread tax liability - the answer to this depends on specifics related to your situation (age, income, etc).
You're welcome. ML may be pushy because they want the issue resolved and if there is an RMD then they want that handled. It is a big tax penalty to you if you miss your RMD. Pick whatever broker you want and get it set up as soon as you can. They will liquidate all positions and deliver cash to your new inherited IRA. If there is an RMD due to you they will send you those funds separately.
Be aware that the RMD rules for inherited IRAs have been a bit of a mess. Information from the Internet may be out of date.
You should look up eligible designated beneficiary. If any of the rules apply to you, then you may not have to do a 10 year withdrawal period and would be a life expectancy based off your age for RMD. The rules are quite complex with the secure act 2.0 so I always suggest a tax advisor.
OP does not have 10 years. The rule states the Inherited IRA must be empty after 10 years but you are still required to take RMDs the entire time. Furthermore, if the mother had an RMD to take and didn't yet, then OP needs to take that before the end of the year.
Eh. Many won’t liquidate until RMD’s kick in.
Peak year of births was 1957, so those folks are about 68, average retirement age is 62, most stocks and bonds are held by a small percentage of wealthy people, so while there might be a slight increase in individuals selling when their RMD‘s commence at age 73, the first year is only about 3.7% of their balance.
- EJ is all over the US. - the the statement’s fund balances are listed in $ not £. - RMD is an IRS rule governing IRAs.
I agree with people who say that's too many holdings. I would see if TRP can automatically construct RMD's on a basis proportional to the holdings. ie. RMD for the period is $X Fund A currently is 10% of the portfolio, liquidate enough of it to make up 10% of the distribution. Etc, etc. If TRP can't do that auomatically, I'd calculate it myself. I wouldn't want to be in a position to decide to liquidate all of one fund before another, although if forced to, I'd probably liquidate a bunch of the smallest positions first, which will effectively do some consolidating for you.
unless you have education in finance, or professional experience managing money, IMO don't give this advice to your mother. She's paying Edward Jones, so she needs to talk to them or another professional for RMD advice. >First question: Why so many bond funds? What’s the advantage? if she's old enough to need RMDs, a bond-heavy conservative portfolio is probably appropriate. However, that portfolio looks like a mess. She probably needs to consider consolidating to maybe 3-6 funds at the most. Even a single fund might be OK, such as the Vanguard Wellsely income fund VWINX, the Wellington Fund or the Dodge & Cox Balanced Fund DODBX. She needs some stocks, maybe 20-50% depending on the overall financial outlook. If she's in good health, she could live decades and needs growth to keep up with inflation. But a basic conservative US low-volatility or dividend fund, and maybe a similar international fund, is probably adequate. Possibly a real estate stock fund. She needs a few bond funds, but not that many. A basic aggregate bond fund, inflation adjusted bonds, maybe a short-term income fund as well.
Good questions. Traditional versus Roth IRA largely comes down to when the taxes are paid when the money goes in. Roth IRA contributions are after-tax, so when you withdraw that money in the future it is tax free, including all the growth! Traditional IRA contributions are (usually, not always) tax-deductible when you contribute. Which is great as a tax break, but since that money hasn't been taxed, you will pay taxes on it, at ordinary income rates, when you withdraw from it in retirement. You're also at some point *forced* to take minimum required distributions (RMD's) from traditional IRAs. And if someone inherits your IRA during their prime working years, since it's on top of their job income the tax brackets can go up and a lot goes back to the government. > I am also confused about is why does this particular IRA have a 1% maintenance fee but my Roth IRA only has a $50 a year maintenance fee? First, for awareness: You can move both of these accounts to a different brokerage, like Fidelity, and pay *zero* maintenance fees. In your situation I'm guessing that your Roth IRA is totally self-directed? I.e. you buy and sell whatever you want in it. Since you're doing all the work, it's just a fee to have the account open (though again, there are brokerages where you don't have to pay a dime for this). What it sounds like your financial advisor is proposing is for your Traditional IRA to be professionally managed, in other words, "If you let us take 1% a year we'll handle all the buying and selling of assets in this account for you; it will not be self-directed." Again, you can have a Traditional IRA at a brokerage where there's none of this and you can decide how you want the money allocated. Alternatively, a middle-ground solution is what's known as a "robo-advisor" where a set of automatic rules manages the account as a function of your risk tolerance and goals. Fees for that are usually half a percent ish. > What if another account has a cheaper maintenance fee, or a flat fee, but the annual return is 7 or 8%? There's really nothing about *the account* itself that determines the annual return; that's a question of what you choose to invest in with the money in the account.
When I need to withdraw my RMD I sell my less performing investments until I reach the TMD amount.
Why are you still working? How long do you expect to work? The reason I ask this is because you are very worried about taxes and are running into your RMD years which are going to complicate your tax strategy. You may be trading your time for very little extra money in the end. Just something to consider. I would talk to a CFP that specializes in retirement and estate planning.
You sound like my sister I had been financially advising. Between her pension, SS & TIRA RMD, she's going to be in the 32% bracket, so she needs to do as much culling of her TIRA as possible at 24% to knock that amount down.
During earning years with W2 income, you actually had less flexibility in tax planning. A high W2 income puts you in a higher bracket. After retirement, I have a lot more flexibility in picking the bracket I want. To answer your question, you don't convert it all at once. You pick the bracket you want depending on your tax planning. Balancing expenses, RMD control, and eventually IRMAA brackets for Medicare. For tax year 2025, the ceiling for 0% long-term capital gains tax is $48,350 of taxable income for a single person, and $96,700 for a married couple filing jointly. You can knock off a big chunk every year if you can control income.
IRA is taxed at income rate. You potentially pay even more taxes in an IRA account at long term capital gain rate. Roth is tax free. IRA is best invested in fixed income. Also plan for Roth conversion to control RMD.
I don't think so, but I could see a total balance limit set or an RMD on roth accounts. However, that will also be at the same time we lose step-up in cost basis as death.
I feel Roth will be the last thing they touch. I am super heavy in deferred and at 58 I am doing some large conversions out of my IRAs into a Roth. I have a multi year plan to roll up to the 24% tax bracket for several years. Several factors pushed me into it...but thinking the Roth is the most untouchable tax wise is one of them. No RMD, and also as inheritance it doesn't cause tax issues for my kids.
You don't need to. All that matters is the distributions and RMD's that exit the account gets taxed. That's why they're called tax advantage accounts.
Fall of 2008(62) -2014? bought a series of GLWB annuities with IRA monies.. Totalled about 75% of IRAs. About 10-25% of net wealth, Since it was IRA monies, we substituted future RMD with a known algorithm future withdrawal.... IOW we bought pseudo pensions with IRAs that had better features but involved substantial fees. Some of these Annuities functioned as a "collar" with a loose upside cap on stocks, Some of the annuities collared interest rates. Todays' annuities of this type put more risk on the buyer at higher fees. We retained management of 401k ->IRA, Roths,, debt free home, and investment property. I built a risk pyramid,; A multi income streams; hierarchical income/wealth. The advisory firm only receives fees on what monies they manage. The advisory provided certain specialized financial products that were difficult for me to learn, execute and monitor.
Move RMD over to brokerage account each year. Keep building on what you have.
Don't worry about RMD's until you get way closer to that time and then plan those (20? years from now?)
Mid 40s here. 1.8M Tax advantaged (IRA/Roth/HSA/Solo401k/529), 850k Taxable brokerage, 460k real estate equity (primary home). I've done a lot of work along the way in this, but have mostly ever maxed out tax advantaged. I was always in the 22/24% brackets, touching into the 32% even in one job. When you are in those brackets it almost always makes sense to do pre-tax, as it comes off the top of the marginal bracket. I also did Roth early on or anytime my salary allowed for it. Anything remaining falls into taxable. When I was a contractor (1099) for a few years, I used an S-Corp, and was able to divert substantial amounts to my solo-401k, beyond the individual contribution limit, and did that. I was otherwise in the 32% bracket there. Btw, finding and taking as many legit business deductions as you can is always better than tax advantaged. Over-did? This one is something I recently started thinking about. First off, many people argue that you should go for 401k only up to match, and otherwise all Roth, that rates will be higher in future. I think that's tough to predict. But I disagree, because it also overlooks the fundamental point that taxation in retirement still requires you to "fill up" the brackets until you reach the pre-tax marginal bracket you deferred at. So if your 401k avoided even the 22% bracket, you'd have fill-up income to $48,476 (2025 bracket) before your retirement income got there. Even then, your average retirement tax rate is far lower than 22%. For your average retirement rate to reach 22%, the yearly RMD is much higher. I've got a table though, and it's in the range of $3.5-4M, withdrawn evenly over 25 years, that your average retirement rate gets toward 25%. This assumes a bit of Social Security, a standard deduction, and adjusts brackets for inflation. I never expected that to be an issue, always aimed at an aspirational $2-2.5M retirement goal. Now I'm mid 40's. Compound growth does wonders, basically a slow and steady exponential curve over many years. Average growth rates are often more than you expect. It's likely by retirement that I could get into that $3.5-4M pre-tax range, possibly beyond. At that point, **taking RMD will have me in a higher average tax rate than the contribution deferred rate.** Currently I'm not working since my last recent job ended, somewhat involuntarily with the job market. But I'm experiencing a couple things about low income brackets. The big one is that long term capital gains rate (LTCG) on taxable brokerage accounts is 0% up to a sizable threshold. Qualified dividends are also 0% rate. I've got about $450k of gains on my taxable account I can work down at 0%, until I choose to work or until I'm 59.5 and can opt to start drawing the IRA for tax optimization. Also, regular income has a decent threshold to pass before it even gets taxed, and a bit more is only taxed at 10/12%. I've been doing IRA->Roth conversions at this low rate to reduce my IRA balance. **It still won't be enough avoid 22%+ average retirement rate though**. Unfortunately, navigating health insurance subsidies creates an opposing income wall, and a huge subsidy cliff I come up against also. Along this path, to reduce taxable income and allow more IRA->Conversions, etc, I've taken to reduce taxable activity on my brokerage. If I sell stocks to realize the 0% LTCG, I target the ones that have high dividend payments. I've started using SGOV over cash for some minor optimization. And, I now only trade my options in my tax-advantaged accounts to avoid having unexpected short term gain bursts. **TDLR**, Summary: You can contribute too much to the generally preferred pre-tax retirement, that it grows to a level that it puts you in a higher average tax rate than your contribution rate. And this is hard to undo once the compound growth trajectory is locked in.