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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
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.
How do you know? What will your income be after retirement? Will RMDs and SS push you into the next bracket? What if you have a windfall? What if your investments experience incredible growth? That’s all taxed. Or, just pay tax on it now, no RMD, no taxed growth, withdrawals are not counted as income.
Enough for 5 years, treasuries. I live on my RMD plus social security. I made the change in April when the market was swooning. I retired 5 years ago but had never rebalanced. So now I can sleep and the market has recovered. Now if it will just stay still…
I also have a recent Inherited IRA. I'm familiar with RMDs, but how do you know how much the RMD withdrawals from the inherited IRA should be? The IRS RMD tables (where you get a divisor based on age) start at age 73 I believe, and im much younger than that. Do I just use the age the person was who I inherited the IRA from, even though he is deceased? ??? Any help appreciated.
I understand your question because I’m in almost the exact same boat. You have to take the Required Minimum Distribution every year for the next ten years from the inherited IRA and are wondering how to leverage this annual cash influx to benefit your kids. I just got the first RMD check from the IRA I inherited. That check was enough after I set some aside for taxes to fund a year of college expenses for my senior who is starting college in 2026. I have a 529 plan for my child that has enough to cover 3 years of her annual college expenses (tuition + dorm/living expenses). I am considering using the RMD check I got to cover her first year to give the 529 a little more time to grow, and am considering using the RMD cash to buy some laddered CDs that will mature as I need them for semester 1 expenses then semester 2 expenses next year. Also putting the rest in my Schwab account. I guess the wildcard is knowing how much you’re planning on spending for college for each kid and adjusting accordingly. I have been very clear with my child what the budget was going to be and saved in the 529 against that goal. So I have a pretty clear idea what I have left to cover. Good luck to you!!
This is actually a really interesting point. If 401(k) plans ever became net sellers—whether due to RMD rules kicking in or a large wave of older investors cashing out—it could create steady sell pressure in the market. And if that happens during a period of economic stress or low liquidity, the impact could be amplified. Pair that with potential short selling from big players targeting the same securities, and you’ve got the recipe for a sharper drop that might even trigger panic selling from those close to 59.5. The question then becomes—do trading bots and institutional dip buyers step in fast enough to stabilize things, or does it snowball before they react?
RMD wave gonna make 2008 look like a warm-up.
So you’re saying the final boss of the market is grandpa’s RMD?
Is the OP using his brain in the room with us? This post has so many false assumptions like RMDs (which can easily be avoided) being significant. Most retirement accounts will not be affected by RMD because they are poor like OP. Another terrible assumption is that when money is withdrawn it just disappears from the economy into some black hole.
**My take on the 4% rule is that cash should absolutely be part of your strategy in retirement.** I know that might get some pushback, but in this current rate environment, you can get a solid fixed return on cash — especially through MYGAs (multi-year guaranteed annuities). I’m in the process of restructuring my in-laws’ retirement accounts, and we’re building a plan that includes fixed annuities, money market funds, and a gradual reentry into the market. They’re entering RMD age and will be pulling around $40K per year, just like your example. They have about $700K in cash equivalents. I’ve already locked in $280K into MYGAs with rates between 5.6% and 6.2%, staggered across 5- to 10-year terms. When those mature, they’ll be worth about $455K and that’s a guaranteed floor, not a market bet. In my view, too many retirees stay overly aggressive when they’re no longer in the accumulation phase. Retirement is about controlled consumption and preservation, not just chasing returns. Having a portion of your portfolio in fixed-rate products that are working and compounding quietly in the background gives you flexibility and peace of mind. So to your question no, I don’t think the full $1 million needs to be invested in the market at all times to follow the 4% rule. What matters is having a reliable plan for producing that income, and sometimes that means stepping out of the market when the risk/reward isn't in your favor.
I have $0.12 in my Fidelity 401k. Every year I get the "no RMD needed" letter.
I'm no longer in IXHL, but I wouldn't be surprised if Resmed is forcing their hand. Resmed is still, at this time a competitor and number one in the sleep apnea field (CPAP is there business). Unless Resmed hints at getting into oral medications, it's only wishful thinking. It surprised me like everyone else, on what I would consider spectacular Phase 2 Topline results, for it to plummet in such a way. I've seen companies announce reverse splits and bankruptcy do better. Something smells fishy with the whole thing. (Is RMD shorting or holding it down, so they can buy out their competitor?)
Partnering/getting acquired by RMD
Some people are hoping some sort of announcement of partnership between IXHL & RMD. It's all rumours as of now & quite frankly hopium from IXHL holders which I am one of them.
Now buy back is only option to get in before RMD earning report after hour
If they can not compete with IXHL then buyout will be a perfect choice for both. Look at RMD stock price went up nearly 17% in 3 months.
The CEO of IXHL did pointedly mention partnerships in today's news. It's not unreasonable to see RMD as that partnership. Question is buyout, investment or license?
I know RMD is being seen as a partner but IXHL having these kind of ground breaking results is actually a huge threat to RMD current dominate market share of CPAP machines if that doesn't happen... the ball is in IXHL's court.
$RMD whats up??? That's my next thought now that phase 2 data out
the 4% rule doesnt take into account RMD (required minimum distributions). For me if i am lucky enough to hit that age the RMD will mandate more aggressive withdrawals/taxes--which in turn begets even more withdrawals/taxes... its quite a quagmire.. im hoping to deflate my IRA wit h a ROTH conversion, however part of the "big beautiful bill" includes asking congress to look at mandating RMDs with ROTHS....
It’s unlikely someone earning $100k+ will get bit later by minimum distributions. If someone reads this and thinks okay, let me switch to investing in Roth, they will pay taxes on it now at their marginal rate which is currently 22%. The amount of money needed for a RMD such that it’s effective tax rate becomes at parity with the 22% is almost $250k. This amounts to OPs retirement account needing to be at almost $7M when they reach age 70. Now, for someone earning $100k, they are more than likely not calculating their retirement number assuming they will withdraw $250k per year. So it’s more likely that they have $2-3M by the time they are age 70, meaning their effective rate during their entire retirement will get no where near the 22% marginal rate they are paying today in a Roth.
$IXHL & $RMD Potential Synergy https://preview.redd.it/le8r2fulfiff1.png?width=1080&format=png&auto=webp&s=f5084e95eb39d2f5682d78d8321891b2b8207dc7
$IXHL & $RMD Potential Synergy -- my thesis Call it speculation, but I just connect the dots and follow the breadcrumbs. The connection between ResMed (RMD) & Incannex (IXHL) is there—any way you slice it. 🔍 Key Observations: RMD is one of the top players in sleep medicine solutions in the world of big pharma. RMD has made at least 29 acquisitions in its history, 5 of which occurred in the past 5 years, all in sleep-related diagnostics, digital solutions, or care. RMD’s most recent acquisition was May 2025 with VirtuOx, a co specializing in at-home testing for sleep apnea & respiratory care (buyout amount never disclosed). RMD has a Ph.D.-level employee on the IXHL Clinical Advisory Board, which could suggest strategic vetting, backchannel engagement, desire to diversify beyond its core sleep apnea hardware (CPAP/ventilation). Facts aside for a sec—JMHO—but a Ph.D. employee of a $30B+ medtech co wouldn’t sit on the board of a tiny biotech unless there was: strategic value, early DD, & relationship development underway. 👨⚕️ Clinical & Market Context: FDA already green lit IXHL's IHL‑42X for Phase 3 of RePOSA trial. If successful, it could be the first FDA-approved oral therapy for OSA. IXHL’s CEO remains bullish on IHL‑42X, calling it a: “high-value asset” and a “breakthrough opportunity” 💎 Market Disruption Potential: An RMD pivot away from hardware would unlock the $10B+ market of patients beyond CPAP reach. 1B+ people globally suffer from sleep apnea, with majority having OSA, the most common type. Think of how many of these people would want to ditch the ugly & uncomfortable mask for a simple oral pill — probably all of them. 📰 Media Coverage & Interest: There’s a reason the New York Times caught wind of this potential game changer in an article posted a few days ago: 👉 NYT Article – July 23, 2025 💭 Final Thoughts: To think that there are no talks going on or no interest by big pharma in IXHL would be simply naive. As the saying goes, “Where there’s smoke, there’s fire.”
RMD stock just had 52 week high. It's having a run of its own that parallels with IXHL hence speculation.
RMD is trending because its being crossposted to from IXHL. It isnt organic.
current RMD age is 73, but iirc, that will be increased to 75 in the next couple of years
> So if you can afford to, why wouldn't you want to max out your 401k? You're literally getting $5k+ more in take home pay and if you only withdraw the standard deduction limit in retirement, you would pay no taxes on it. And, often enough, your employer will give you *free money* matching a portion of how much you contribute! > Why doesn't everyone do this then? The majority of people do contribute to their 401k. As far as withdrawal strategy goes, there are caveats. If you're doing estate planning and want to leave something great to your beneficiaries, they're far better off if you drain your 401k/tIRA first and save the Roth for last. Reason: If you inherit someone's IRA while in your prime working years, you have RMD's and a total of 10 years to draw it down, and that's all ordinary income on top of what you're already making at your day job. You can easily have 40% of each IRA distribution go to taxes. Axe me how I know...
Yea this is a reason why you might not want to have 100% in Roth accounts. Even if you like Roth accounts to avoid RMD or other reasons it probably would be beneficial to contribute some amounts to a traditional , because as you said while working you tax deduction could be 20% ; then when retired your taxes could be zero or 10% or something low if you are with drawing some non taxable income from your Roth accounts
I'm not going to error check your effective tax rate calculations, so let's assume they are right. Yes, you can withdraw up to the standard deduction tax-free, because the two cancel out to zero. But you're either going to pay tax now or pay later. There is no free lunch. The goal is to get the pre-tax money out with the lowest tax over the long term, not just year over year. Ed Slott has a quote: "An IRA is an IOU to the IRS." (Obviously it applies to pre-tax 401/403 as well.) If you max out the pre-tax 401(k) and presumably receive a match of some kind for 35 years, you're going to have a hell of a lot more money in there that will eventually come out in big, taxable chunks with RMD. So managing withdrawals to incur some tax each year makes sense. This is primarily why we convert to Roth when we first retire and income is low. We can cap conversions in the 12% or even 22% tax bracket, whichever one makes the most sense in terms of saving future tax.
This is the 2nd day that RMD and IXHL have had very sympathetic trading patterns. I don't think this ends with just the press release. https://preview.redd.it/ied5r16x5vef1.png?width=1397&format=png&auto=webp&s=c0cc029fdc5a7705a136f873b3d07dc9b6fa6753
You should read through this: [https://www.bogleheads.org/wiki/Managing\_a\_windfall](https://www.bogleheads.org/wiki/Managing_a_windfall) And keep in mind that reasonable, diverse investment funds like VT or the equivalent of VTI and VXUS should double your money every 7 to 10 years. If some or all is in a traditional retirement account, withdrawals will be taxable and you will have 10 years to completely withdraw, probably with an RMD each year. I'd recommend (A) taking more or less equal amounts to keep your tax bracket as low as possible and (B) cranking up your own 401k withholding to offset some of the income.
Sometime in July. Unless it is bought out by Lily or RMD, then you will here the news from them and we'll all be rich.
On Feb 4 2025 $RMD sent Dr. Alison Wimms to IXHL as a clinical advisor for early pipeline and risk due diligence. In Mar 2025 $RMD began recruiting M&A integration specialists. This appears to be the first time they ever advertised for dedicated M&A integration experts. The tight timing suggests these moves were linked. The new hires will build AI powered toolkits and standard processes. Their work feeds into Resmed’s AI/ML Integration Center of Excellence. Taken together these steps hint at coordinated deal preparation around IXHL
Might surprise you, but most people’s goal in retirement is not to take just their RMD and leave the most possible money to their kids in a taxable retirement account that needs to be liquidated in 10 years. Also there is a lot to minimize in a brokerage account lol. Literally the most control you can have over your taxable gains, interest and dividends.
Pre-taxed 401K if available or IRA. The tax brackets and standard deductions increase over time, effectively resulting in a lower taxable income on the same nominal amounts from year to year. The Roth IRA, when taxed, experiences a significant reduction in compounding over a lifetime compared to a traditional 401K/IRA. In the event of an unforeseen circumstance requiring early withdrawal from the Roth IRA before the age of 59, the intended benefits could be undermined, as the IRA/401K would likely accumulate a greater amount due to the advantages of pre-tax compounding. Hypothetically, The Roth IRA 5K minus all taxes vs IRA 7K pre-tax over 45 years at 10%, the Roth IRA would net 442K and the IRA 618K for a difference of 176K. If you are over 59 1/2, the 10% early withdrawal penalty doesn't apply. The Roth conversion primarily concerns Required Minimum Distributions (RMD) which can be used before or during retirement. Retired high income earners usually will have a lower earned income tax when they retire.
I never found any good calculators, so I made a massive (for me) spreadsheet to do projections based on: Starting value at the beginning of the year Variables for annual div yield and growth (that get applied to every year in the projection) RMD (or expected withdrawal) amount Amount of dividends received Amount sold (Withdrawals minus dividends received) End of year balance I have a section like that for each of my accounts, and then a summation section that adds them all up and adds in Soc Sec, taxes, and spend to come up with a total year end value projection. Once you have the basic formulas built and tweaked to project the current year and following year, you can extend it out into the future as long as you want by just copying the 2nd row. It took about a month (not full time, a few hours at a time on weekends) to build and tweak. The math isn't really complicated but it takes a while to troubleshoot your formulas so they're calculating what you really want to calculate. it doesn't account for specific stocks, just each account as a whole. And whatever you set the dividend and growth variables to applies to every year, so it doesn't consider drawdowns. But we know what long-term returns have averaged, so that has to be good enough or else it would take forever. If you're handy with Excel and good at math, you can do it. And FWIW, I've been retired 5 years, I have a very defensive portfolio, I've been taking out 3.5% - 5% each year and I have the same amount now that I had at the beginning. My projection using 4% div yield and 4% growth/yr says I'll still have 40% of my starting amount left in 30 years. The reason it gets depleted at all is because I'll have to start selling some of the dividend stocks at some point to fulfill RMDs and that has a snowball effect.
Roth IRA has a longer time horizon than any account. If OP is 40, there’s another 35 years before RMD age. The Roth IRA isn’t subject to RMDs, so it can continue to be aggressive. Also, the most important factor for Roth, no taxes. Target Date Funds are invested in multiple funds that own every asset class of the market. As you get closer and closer to age 65, these funds sell equities and buy bonds. They follow a glide path down, almost like a plane flying across the country. As you get closer to your destination, the pilot starts to descend the plan and slow it down to come in for a safe landing. For a taxable account, if none of it is for your emergency fund, then invest it to your risk tolerance. But you should always have an emergency fund and a taxable account is the primary source of it. Bucket 1 is first to withdraw, least aggressive. Bucket 2 is second to withdraw (pretax retirement assets) and allocation based on risk tolerance and/or time horizon. The time horizon isn’t binary, if you’re 95 and expect to pass on the assets but have enough for you, then time horizon extends to beneficiaries. Bucket 3 is past to withdraw, most aggressive. Grow that baby.
I’ve heard of RMD’s but what’s an RDA?
Traded in an IRA. Taxed upon withdrawal. OP previously posted at 4% RMD
Well said. We will be withdrawing more than the RMD annually.
It's in an IRA so no tax until it's withdrawn. The RMD required about a 4% annual draw based on the Jan 1 value.
I am attempting to understand the mathematics of the Roth IRA (after taxes) compared to the traditional IRA, and I do not perceive any benefits of a Roth IRA if one’s income falls within a lower tax bracket at that time. The Roth conversion primarily concerns Required Minimum Distributions (RMD).
RMD had to start at 70.5 in the past. The rules are now 72 or 73. As a retired Financial Advisor, my suggestion is you call and talk to Fidelity, they will give you all the information you need.
I am unfamiliar with what rule you are referring? Do you have a link? The only RMD that I know stopped due to SECURE 2.0 was the Roth 401k RMD.
There would only be RMDs if their father was RMD age and it was traditional.
Sorry for your loss, man. Went through similar with my mom and her accounts (including an IRA) last year. Have you spoken to Fidelity's "transition team" during all of this? When I did they were pretty good about clarifying information, including that at least in my case I had RMD's to take. Fidelity's customer support is, in my experience, outstanding. I'd give them a call and ask follow-up questions.
The rule that you don't have to start RMD until 73 just changed. He needs to call Fidelity and ask them if it's a Roth or Traditional and if RMD's have been started or not.
Your RMD is determined by the value of the account on 12/31 of the previous year. I typically pull RMDs in Jan/Feb, but will delay a bit if the market has taken a big dip. Others choose to wait until late in the year. If you do that I recommend gradually selling off stocks and moving into bonds or money market the amount you need to withdraw for RMD, to avoid the risk of the stock market being down in December and you having to sell stocks at low prices to get the needed finds for the RMD.
My wife and I are in a similar situation, in that we have enough passive income that covers both essential and discretionary spending, by way of two annuities and our social security. We're not even touching our equities until RMD time. Essentially we have what's called, "license to spend." If you are comfortable with having T-bills cover your expenses and inflation for the next 20-30 years, you're golden.
Either sell now and lose that dividend or wait and risk the price tanking. and with a chunky RMD looming, having too much tied up in one stock just makes the tming even trickier. feels like you’re stuck in “sell low or miss income” lmbo with no clean way out. you ever considered breaking up the sale into staggered chunks or triming earlier in the year so it’s not all riding on one month?
For my wife and me, our SS plus pensions will easily cover our monthly expenses but I plan on doing regular withdrawals just to reduce my RMD requirements in the future. I'm currently living off dividend income automatically withdrawn in the beginning of the month until SS and pensions kick in over the next 2-5 years. Automated monthly 401k withdrawals also pays taxes so I don't need to worry about paying estimated taxes. I am strategizing not owing anything for taxes plus or minus a few hundred bucks
Important to look into RMD's here to see what, if any, your minimum requirement is every year. Vanguard has an article on best practice for traditional IRA's... basically that in most cases it's best to try to spread it out in equal chunks: https://corporate.vanguard.com/content/corporatesite/us/en/corp/articles/minimize-taxes-inherited-ira-distributions.html Roth, if possible, I think you'd be best to defer and put off as long as possible to maximize tax-sheltered benefits for any assets within them. Overall this is probably a question best suited for a CPA.
From Schwab app (I also have a Schwab account, but inherited IRA is at Vanguard) Set up recurring RMDs through Schwab MoneyLink®. Your annual RMD will be automatically calculated and then transferred to the account you designate. (To enroll, visit Schwab.com or call 800-435-4000.)
What brokerage do you use? Vanguard has a feature to set automatic RMD distributions.
Likely high single digit percent but depends. Plug into the Schwab inherited IRA RMD calculator to nail it down exactly. https://www.schwab.com/ira/ira-calculators/inherited-ira-rmd-calculator
The dividend is priced into the stock price. If you don't want to hold the stock, sell it all. No reason to time the market with your RMD, you can do a lump sum or break it up into monthly or quarterly distributions.
Ha! just here braggin', my BENE IRA from 2004 has been RMD'ing for 20+ years now. Glorious! Sorry for you and all since, but that 2019 law change suchs.
There are some spicy rumors swirling about an $IXHL buyout or partnership. From what I've gathered, it looks like Resmed $RMD. IXHL will be getting PR this week of the change over to NASDAQ Capital Market. Phase 2 Topline results are expected to follow shortly. https://preview.redd.it/49kvoorstt9f1.png?width=958&format=png&auto=webp&s=09d1ac27606d9dbb684b779df15344a216aa62b2
We have 40% in taxable,40% in IRAs/401ks, 20 in Roth. CG on taxable draws will be around 60% for our first year of retirement. We wont pay much tax at all until SS draw and RMD time. Flexibility is really what I’m getting at. Don’t put ALL of your eggs in IRAs, especially if you are retiring early.
Qualified Charitable Distribution (QCD). You donate whatever you don't want as RMD income. The charity must be 501c3 which makes it qualified. There are annual limits.
If you’re 40 start optimizing Roth and taxable. I worry about people having such huge 401k’s. They generally spend that money last and never enjoy their retirement. Can’t tell you how often i see people taking RMD, and when they die the vast majority is unspent IRA money. The vast majority of people don’t have near enough. And the ones that have enough end up not spending it all. Much like vitamins not really being the benefit so much as being the healthy type to even care to look up and take vitamins. Maybe talk to a financial planner. Even if for one time review fee. You’re obviously very frugal if you’ve been maxing for a while. Find a good trusted pro to do some planning while you’re so young.
Ok if you want to argue 401k vs Roth IRA, I think the Roth is better, assuming no 401k match. More flexibility with the Roth, no RMD’s, and you can withdraw the principal at any time. That is not true of the 401k. Why do so many people end up doing 401k conversions to Roth before retirement? I’d rather have more money in a Roth than a 401k, and this is coming from someone that has way more money in a 401k than a Roth.
In kind transfers are tax-free. If you liquidate, your taxes will be based on the proceeds v. cost basis. That is where it will be important for you to accurately document what the value of the security is on your father's date of death. This is for non-qualified accounts only. If it is a qualified account, make sure your father took his required RMD. Other than that, it won't matter, because you will have to take a distribution every year until the account is exhausted in ten years. You will be taxed no matter what.
LT Capital gains Brackets: Single up to $48.3k/Married up to $96.7k: 0% Single $48.3k - $533.4k/Married $96.7k - $600,050: 15% Single MAGI above $200k/Married $250k: 15% + 3.8% NIT Tax Single above $533.4k/Married over $600k: 20% + 3.8% NIT Tax >As far as I can tell an even bigger loophole if you have a lot in a taxable account is just to take 1 year off work, earn no income or just below the threshold, cash out and with income below the threshold pay no taxes on the gains? The gains themselves contribute to your taxable income, so it's not easy to do unless you have no other income at all. It could be a good way to retire early and pay way less taxes, but once you have social security at age 62, and RMD's after 73, you're bound to have some taxable income.
Thanks, considering such, I'm not under the gun on the RMD
Being that you're still working, are you working for the company that sponsors the 403b plan? If you are working for the company that sponsors your 403b or 401k, and are not an owner of the company, you don't need to take the RMD from that account until you leave that job. If you have outside IRA's you still need to take those RMD's but nothing from the plan that your current employer sponsors.
The max amount you can contribute to a QLAC is $210,000. Given that your current 403b value is $260k, I would recommend doing $100k into the QLAC. You can defer the QLAC up to age 85, you would then have $160k that counts towards your RMD calculations. Keep in mind that the QLAC is a fixed account so you don't have the ability to invest in the market or mutual funds like you can with your 403b. By having the QLAC, you can treat that as the bonds portion of your retirement account and be aggressive with your 403b. Think of it as shifting money from your 403b to your own personal pension. Assuming you defer it to age 80 and 85. You would have QLAC pension of approximately $1100 per month.
You worry about RMD and taxes but do you even know what the numbers are? Just some rough numbers: your marginal rate is 22%, if you stop working, you'll drop down to under 12% for sure. So you worry about RMD at 12% and think you should rather stop contributing to your 403b and pay 22% instead. Do you think that will give you more money?
No worries at all, feel free to reach out if you want more info as well, can break down what it is and how it can satisfy your RMD requirements.
QLAC - Qualified Longevity Annuity Contract sounds like it may fit your needs if you don't need the funds but need to satisfy RMD requirements.
As the RMD will most likely not be needed, I will probably reinvest it to offset the increased taxes to some degree
op not life insurance I specifically mean long term care insurance. It’s insurance that pays for care if your wife were to need to live an assisted living or something of that sort. There are hybrid vehicles that do have a portion of life insurance but it would specifically be for that purpose. If you mean just provide money in the long term I think you could consider IRAs as that would give you more tax deferral. You could open one in her name and put the money in that to avoid RMDs until she is 75. Also sadly you will have to take an RMD at 73 not 75. It’s 75 if you turn 75 AFTER 2030. Just a FYI
Ya, the RMD is just around the corner unless they raise it between now & then.
Money is about when you will spend. Anything you will spend in 2 years or less: SGOV (better than HYSA). After that, it should be invested in something that has a chance of beating inflation. It is never too late, but you should have learned this LONG ago. Soon you will be RMD age. Hopefully you can do the tech (you’re on Reddit). Honestly try to find an ethical trustworthy pro in your community to speak with. Maybe they don’t even manage your money. But you likely need help. But yea. All personal finance is the same: spend less than you earn, have emergency fund, the rest invest in something auto (don’t rely on self discipline), sell when you have something urgent to pay for, do that every month of your life. Best of luck
The way I look at it, today if I were to retire my income would be *far* less than it is today. That means that money would be at a far lower tax bracket. Traditional makes the most sense. Perhaps some day if I'm lucky enough my retirement savings will start to exceed what I'm making right now, in which case I'll start using Roth instead. Odds are though, considering I'm at or near my peak earning years, it's likely my retirement withdrawals will never be higher than what I'm making today. Especially if you think in terms of "real" dollars and adjusting for inflation. Those tax brackets will be a lot higher in 20-30 years. Lastly I think the Roth fans are trying to impose political beliefs into it. They usually assume the US will have to dramatically raise taxes in the future to cover the national debt and loss of the dollar's reserve status. First off, historically speaking taxes have gone down, not up. Secondly if the US is really that hard pressed for tax money, don't think they won't go after Roth. I doubt they'd overtly just tax it, but they can adjust the RMD tables and force you to cash out. Perhaps making the tables more aggressive for everyone or make it based on account balance. My point is there's lots of subtle ways to make people with Roth accounts pay, so don't think it's some "weird trick the IRS doesn't want you to know about!"
\>I hear guys on these pods say you will miss on hundreds of thousands by not doing Roth early on. That advice does not apply to you. It applies to people who are early on in their careers where many will only be in the 10%-12% tax bracket. You're not early on and already in the 24% tax bracket where you are losing 24% of your Roth 401K contribution to current year taxes. In a traditional 401K you don't pay taxes on the contributions. You do pay taxes on distributions when withdrawn later when you might be in a lower tax bracket. They won't let a traditional 401K grow tax free forever. There will be Required Minimum Distribution starting (currently) at age 73. The first year RMD is \~3.8% of the previous year end balance and decreases in percentage in the following years. Switching to a traditional 401K at the same percent of pay would give you some breathing room in your current take home cash flow. A mix of Roth and traditional is also an option.
\>the point of having both is to have flexibility so that you can always be taking out of the most tax advantaged account later on. Traditional IRAs and 401s have Required Minimum Distributions starting at (currently) age 73. The first year RMD is \~3.8% of the previous year end total. You can't always entirely take more exclusively out of the most tax advantaged account. They won't let traditionals grow tax free forever.
I’m so confused. lol but really someone tell me…now a good time to break up my 60/40 balanced fund IRA? Been thinking about it for about a yr. Retired. Don’t need RMD. Grandson will inherit my ira.
We sold half our stock portfolio in our IRA and including all of Apple, near the top in January. None of those stocks have advanced to Januarys level. The cash is in high yield while we shift gears and buy dividen stocks to cover the next 7 years. IRA account has RMD of seven years left before final withdrawal.
I’m nine years older than you, followed the invest almost all stock strategy until about two years ago and I’m really glad I did. Now I make so much more on the dividends and rentals that I almost never have to touch what’s invested, and can leave the IRA alone unlit RMD years. Go for it if 20% drops like in April won’t scare you away.👍
You realize (or maybe I should say you don't) that you can RMD cash and cash equiavlents, and even transfer in kind securities? To say you are forced to sell stock at low points is only accurate, if a person put them in that situation. And to say it's "lost and cannot be recovered" is also inaccurate wtih again with in kind transfer.
Bonds are the stable part you withdraw from unless doing a rebalance. So it depends on when you gonna take out how much. Not mad at 2 years expected expenses/distributions in BND or SGOV. Then take it from there with risk tolerance. It’s whatever lets you sleep at night for the rest. It is always a balancing act of risk on/risk off. But it is about spending, when will the money be liquidated and spent. Some people that is right after retirement, in my experience helping clients, they normally go into bonds way too early as they don’t even touch 401k until RMD time, they don’t want to pay taxes. Wild really when you think about it.