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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
I don't think I can contribute to a 401k while unemployed since it's usually a company/firm sponsored retirement plan. Pre-tax money (In this case for regular 401k) means you're deferring to pay taxes now and will eventually pay it at or after retirement age. But, you'll be forced to take money out at 72/73 via RMD or face penalties.
Haha yeah, after I took my RMD last year I made more than the RMD. The RMD was free.
You are not really talking about rebalancing. You are talking about tax management. You should consider moving 401k money to a Rollover IRA and then moving that over to Roth account to avoid future RMD. If you have to do RMD now you should invest what is left into low tax investments such as munificple bond funds or invest in funds the generate constructive ROC dividends. The is probably more you can do but with the information you provided I don't know what that would be.
If you're talking about RMD's you must be referencing a tax-advantaged account...? In which case you can rebalance however you like, makes no difference. If you're talking about stepped-up cost basis though that'd mean a taxable account... but then no RMD. > My original plan was to die My man, that's not a good plan.
With your compounding question you also have to ask yourself, will taxes be the same rates when I retire as they are currently? At first glance, trad 401k will compound better due to higher principal. But you also have to consider RMD's and when you'll need the money. Roth has a feasibly longer time to compound due to never having to be withdrawn.
Yes, I saw in another comment that you expect your income needs to be lower in retirement so it makes sense to defer taxes so you can pay a lower rate in retirement. RMD's and taxes on inheritance are secondary factors that you can try to manage/reduce by drawing down tax deferred accounts later when you are paying lower taxes.
I don't see how it would possibly be beneficial to you unless you have saved much more than you need for retirement and are planning to have even higher income in retirement than you are currently earning. You will end up paying your top marginal tax rate for every dollar you put into Roth 401k, versus paying your average tax rate for every dollar you remove from standard 401k. And you will very likely be in lower income range and have even lower average tax rate in retirement than today. In retirement you can withdraw more than you need to fill your tax bracket and reduce future RMD's and their tax rate, move it to a taxable account where the cost basis will be reset upon inheritance.
RMD is based on your 12/31 balance of the prior year
Take your RMD. Decide how much additional taxable income you want this tax year, this is the amount you will convert. Do it as Direct, trustee to trustee. Use the RMD to help cover your increased tax liability. You might need to pay this as a quarterfly estimate. Those are due by Apr 15, Jun 15, Sep 15, and Jam 15 of the next year. For instance... As of Dec 31, 2025, you know the retirement account balances subject to RMD. Take it and put it aside as cash. In March, you work up your 2025 firm 1040. You use this to project the headroom of the maximum tax bracket you want to maximize for purposes of additional taxable income. Initiate the conversion. Prepay the tax estimate on this amount relative to your projections. Done.
How does a RMD work (for over the age of 73) if you just use a trad Ira for the back door Roth purpose only? Funds are in the trad for less than a day for example.
But the idea here is that you take the hit from the RMD this year (nothing you can do about that) but by moving the rest of the IRA balance to Roth (using this year's RMD to pay the taxes, perhaps), then it would slowly lessen the RMD amount, if not entirely depending on your IRA balance and/or the tax rate you're optimizing for.
>In the past I’ve typically just taken the RMD, paid my taxes, and move the rest to a brokerage account. Yes this is common >However, lately I’ve been thinking I’d be a lot better off putting that money into a Roth IRA. You're not allowed to put an RMD into a Roth IRA. But you are allowed, once you've satisfied your RMD for the year, to convert any amount you want to a Roth IRA. >I understand I cannot do a direct rollover as taxes need to be paid. Yes. >And I have no “earned” income that would allow me to simply just contribute to a Roth. Then no Roth IRA contributions for you, sorry.
First, don’t listen to me! I enjoy risk, and I’m very patient. I buy small amounts of many things and hold them for decades; I get winners and losers, but over the long term the ones that do well easily bury the ones that don’t, since over years an equity can gain 10,000%, but can only ever lose 100%. So, again, don’t listen to me! All that said, I’ve recently added TE Connectivity (TEL) and ResMed (RMD). I would consider adding some AAPL in its current dip before next week’s earnings, but already have too much. Applovin (APP) is up 600% since I bought it, but it’s retreated quite a bit from its peak and the current dip may be an opportunity to add some.
Short answer: yes, a lot of people really do keep everything under one roof and there’s nothing inherently “unsophisticated” about that. Multiple brokers usually happen for **historical or logistical reasons** (old 401k here, inherited account there, employer plan elsewhere), not because it’s optimal. From a day-to-day management perspective, simplicity often wins, especially once you’re in drawdown mode. If Fidelity already gives you: * low-cost index exposure * solid bond and cash options * clean withdrawal mechanics * good tax reporting …then adding Vanguard or Schwab doesn’t magically improve outcomes. It mostly adds admin. The bigger variables are: * asset allocation * withdrawal strategy * tax sequencing (Roth conversions, RMD planning)
Hyperbolic arguments are flawed logic. Of course they do. But at a seemingly insignificant % of even that sole account, and when it comes to RMD statistically a big % gets invested right back into the market. The annual drawdown is a rounding error in relation to annual contributions.
The rate of retirement/death withdrawals have to outpace inflows. While the Demographics of the US have flattened, the point that can possibly occur is still a long way away without some other additional event. Boomers are not that much larger in absolute terms than the following generations. 75m/65m/73m/69m. Boomers/X/Millennial/Z. Millennial is just now hitting peak earnings. And Boomers are largely taking RMD then putting a portion back in the market. So their retirement is somewhat blunted. And they are retiring later. And the younger generations contribute higher and more sharply into equities and keep it higher in equity than bonds. Plus until this year we were net positive on immigration. What I am saying is a massive unemployment event could hammer 401(k)’s, bit the demographic flow is automatic 401(k) buying steadily gains steam over the next few decades, it doesn’t lose steam. Housing is another story, and there are tertiary effects from that, but its likely its net positive as the housing supply transfers into cash or kids occupying their parent homes. This also why any complaints about historical P/E being high is stupid. It has to be higher. The entire country wasn’t putting 5% of their paycheck plus a match in the market every payday untaxed. They are now. Historical P/E is as meaningless as the value of the dollar before we came off the gold standard for what you do today. The metric themselves are fundamentally different. You aren’t getting the top companies in the index at 15x P/E on average ever again.
you’ll get full rape; just a matter of how quickly. all your profits will be taxed one way or another. guy’s never heard of an RMD or how it’s calculated.
ROTH IRA your owning taxes at withdraw or paying for ROTH conversion. If conversion not made early enough at RMD you'll get hit. Get converting don't hit you next tax bracket doing so.
It wouldn't make sense if the word *minimum* in RMD means maximum.
has anyone looked into healthcare equipment lately? my running thought is getting into companies that are more focused on equipment especially home equipment that people use themselves rather than hospitals. especially with this older generation getting on medicare. for some reason if medicare gets touched im betting equipment that is focused on preventative or at home alternatives would remain safer if it means people aren't going to the hospital. more specifically, im looking at RMD - ResMed because all the other ones im seeing wouldn't be allowed to be posted here.
well you are. RMD is not deduction and has nothing to do with tax deductions.
Worrying about RMD is foolish IMO. The idea that you will have "too much" tax-deferred money so you should pay taxes now to avoid having to pay taxes later, doesn't make sense unless you have low income years that are outside of your control. If you plan on retiring *before* 60 and you don't have enough Roth contributions and brokerage money to bridge the gap while you set up your Roth conversion ladder, then sure, start building up your brokerage account up to your target amount. But nothing about it has to do with avoiding RMD.
Nothing you need to do with the brokerage. Roth distributions are tax exempt so you can do whatever. Specifics of the traditional IRA depend on who you inherited it from, if they were taking RMDs, etc. But within the 10 year window it makes sense to spread things out roughly equally if possible. If there's a RMD and you just take the minimum every year you can end up with a huge chunk to take in the last year, which can get into higher incremental tax brackets.
Thank you for the info. I am not a ROTH IRA participant due mostly to income restraints, but do have a SEP, traditional IRA, and 401-k. May see if I can convert some of my traditional tax deferred funds to a ROTH when I retire st the end of next year, close to age 70. I believe I will be able to between the age of 70-73 before I take my first RMD. I just bought my first batch of Muni bonds in my taxable brokerage via a muni ETF that is primarily high investment grade quality. I read it will provide me with a tax equivalency of ~5.5% in my current tax bracket (37%.) I am a co-owner of 3 manufacturing businesses and am expecting a LOI next week for an attractive sale offer next week. My daughter is 38 and I am guiding her through the ROTH investment process. She is a book-keeper with a law firm, but is not receiving any IRA or Healthcare benefits. So far, I have chosen SCHG for her ROTH and VOO for her taxable brokerage. I have suggested that she DCA the ~$40k she has in her taxable brokerage into VOO, but may suggest some SCHD too, since she is quite risk adverse as a new investor. Your comment gave me "food for thought" so thanks again!
Helped my elderly aunt harvest nice “losses” on Hershey, Comcast and HPQ in 2025. The cost-basis of all three had reset following her husband’s death a couple of years ago. Sold when prices dipped in fall but all were net gains from original purchase prices. These really helped with offsetting the gains of a couple of high-turnover mutual funds that (combined with a rollover RMD) were creating onerous tax drag for her. Of those three, we set a standing order to rebuy only Hershey if the price gets close to what it was sold at.
RMD - required minimum distribution
Experience with audits doesn’t override the written law. Statute beats anecdotes all day Audits don’t waive statutory limits. The one indirect rollover per 12-month rule in IRC §408(d)(3)(B) is not waivable. IRS forgiveness relief applies to missed RMD penalties (IRC §4974), not impermissible rollovers. Reporting both as rollovers doesn’t make them valid—the IRS looks at distribution dates on Forms 1099-R, not explanations. If there were two indirect distributions, one is taxable by law unless reversed as a custodial error (IRS Pub 590-A; Announcement 2014-32).
I would'nt call it pocket change. Your tax burden in retirement can vary greatly depending on accounts you pull funds from. Couple that with potential RMD bombs, optimization can make a significant difference. Though agree its not hard with a little effort.
The misconception of financial advisors being a scam is silly. It’s a service that you pay for out of convenience, not some investing guru who is supposed to make you rich while they skim off the top, that’s a hedge fund. Most people pay someone to change the oil in their car because it’s easier, not because it requires prodigious technical skill. Anyone can learn it, yes. It’s the constant attention that you’re paying for, so you don’t have to waste your time on it and can pursue other ventures. I would say it’s more a point in time rather than a point in wealth, that a financial advisor becomes worth it. When you’re young, the advice is all the same: save what you can when your cash flow allows. Getting older puts things into perspective and time becomes more valuable, that’s when people tend to want assistance managing their finances so they can spend their time with their kids/grandkids and not have to worry about what their RMD is or how much they will owe in capital gains taxes. People on Reddit don’t understand this.
RMD concerns are overstated. Too lazy to do the exact math now but one time I found you needed to have to withdraw something like $600k/yr in RMDs to hit a 22% effective tax rate. If you’re getting forced to withdraw that much in RMDs then you have absolutely nothing to worry about.
Be careful what advice you take here. Each individual and situation is different. For those with a net worth over $1-$10M+ and of retirement age or entering that phase, things become much more complicated. I’m a very active investor, but it’s not for everyone. I spend many hours researching, following analysts, financial news, charts, etc, but most retired people won’t put that much time and effort into it. Even so, I still have a financial advisor. He/she is very helpful if you are living off of your profits, for making the most of your tax advantages, keeping up on your RMD, etc. It’s worth every penny to me. I still call all the shots with my stock picks, etc, but the guidance has saved me a ton in taxes, among other things. PS. Don’t forget to get the benefit of your losses for the year before 1/1/26 for your 2025 tax advantages.
My husband is 78 and I am 70, so I understand the need to preserve our portfolio but would also like it to grow We only pull mandatory RMD’s.
If you never took distributions then you likely are screwed. If you don’t take the RMD’s then IRS expects it closed in 5 years, tons of penalties. Find a good tax pro.
Here's a chunk of my finding about my situation - I realized there's a few snippets missing here and there, I'll update it tomorrow.. Because you inherited the account in 2015, you are "grandfathered" into the pre-SECURE Act rules. The sweeping changes introduced by the SECURE Act in 2019 (and later SECURE 2.0) generally do not apply to you. The "Stretch IRA" strategy is still available for your account, allowing you to take distributions over your own life expectancy rather than being forced to empty the account within 10 years. original owner passed away. Key RMD Rules for Your 2015 Inherited Roth IRA . Annual RMDs are Required: Unlike the original owner, who had no Required Minimum Distributions (RMDs) for a Roth IRA, you as a non-spouse beneficiary must take a minimum amount out each year. . The "Stretch" Calculation: Your RMD is typically calculated using the Single Life Expectancy Table found in IRS Publication 590-B. You take the account balance from December 31 of the previous year and divide it by the life expectancy factor corresponding to your age. . Deadline: You must take your annual RMD by December 31 each year. . Tax-Free Status: Since this is a Roth IRA, the distributions (including earnings) are generally tax-free, provided the account was open for at least five years before the v . Successor Beneficiaries: If you were to pass away, your beneficiary (the "successor") would likely be subject to the newer 10-year rule, meaning they would have to empty the account within a decade of your death.
I know this is now aged a few weeks here, but I'm in an EXTREMELY similar situation... lost my mom back in 2015 - Roth IRA account was inherited by me and left with TD-Ameritrade.. I created an account, logged in and secured it all and then it was one with the wind for a couple of years - until I got a notice that the account was being transferred over to Charles Schwab in a few months - which coincided with a major move for myself and family... lost the paperwork for Schwab. Here we are in 2025 - I got into my account finally and after hours and bugging tax guys and digging around online, the thing I've been told the most is as such. Because your mother passed away before 2020 - old IRS rules were applied that grandfathered the account into the "Stretch IRA" rules instead. The "Stretch" Advantage: Unlike people who inherit today (who usually must empty the account within 10 years), you are allowed to spread your withdrawals over your own life expectancy. Required Minimum Distributions (RMDs): Because it is a Roth IRA, your mother was never required to take RMDs. However, as an inherited account holder, you are generally required to take a small amount out every year (an RMD) based on your age. Tax-Free Growth: The money you leave in the account continues to grow tax-free. As long as the account was open for at least 5 years (which, given the timeline, it almost certainly was), all your withdrawals—including the CA$H you want to take now—are 100% tax-free. The ONLY snag is trying to link an external bank account to the Roth IRA due to AML/fraud concerns - which I completely understand! However there's supposed to be a simple form to fill out - send in via their site and within 48 hours it gets added for you. If it's any help, I've been told my account (which I was grandfathered into the old IRS rules pre-2020) is considered a "Stretch" Advantage situation since I don't have to worry about taxation, fees, fines, or any of that mess! Here's my big problem at this point after so much scrounging around and learning things I would rather not recall anymore already - WHICH FORM IS THE RIGHT ONE FOR THIS "Stretch Roth IRA Inherited" account? I've managed to narrow it down these two forms and I'm a fair 95% leaning towards just blasting that IRA Distribution Req out in like 30 seconds and submitting it so I can be done before the EOY... 1 - IRA Distribution Request Form 2 - IRA Required Minimum Distribution (RMD) Request Form I appreciate any corrections, advice, help or really even workarounds that anyone may know of to get past this issue of not being able to add my own bank to Schwab so I can transfer funds! Thanks again all\\any\\everyone! Z
You do not understand, it is RMD issue. This guy has everything taxable at retirement (all stocks) [https://imgur.com/u9HgMPz](https://imgur.com/u9HgMPz)
Just remember that a large trad IRA is going to have to come out taxed as an RMD eventually. And at ordinary income rates. Some people find themselves with a huge amount on their hands and then regret not doing a Roth instead or converting. I was so low income that a Roth didn't make sense for me, But I ended up starting one anyway and I'm glad I did. It's nice to have a big chunk of cash I can access without any tax implications.
If you retire early, I think there is also some benefit to doing some Roth rollover before RMD kicks in. That is something I know little about and would ask a CFP
Total amounts matters a lot. OP wants to spend entire money after retirement. He wants to know what is the break even? Say I have 800k by age 65 in traditional IRA and my friend has 45 millions in traditional IRA at age 65, RMD kicks by age 70 for rest of the life. If both of us contributed to ROTH instead of traditional, it is favorable for my 45 millions friend than me! Why 45 millions example: One day of my friends made his 2-3 millions in to 45 millions and struggling to plan what to do!
It depends on the fees your dad was being charged. FAs should also be advising on taxable vs tax advantaged accounts, RMD strategies, tax, insurance, and inheritance strategies. VOO + CDs/Bonds... I've seen much worse - like high fee funds, complicated products you can't easily ACATS away, etc. Depends on the fees your dad was getting charged but it sounds like he did it right... especially if your dad has no clue and doesn't want to DIY his own finances.
Having both will give you options at retirement. With traditional, you'll deal with RMD's (required minimum distributions). Having both buckets - traditional and Roth as well as a normal taxable account will give you a good mix of accounts you can dip into and minimize your tax liability.
You’re right. Tax advantaged is better. It is optimal. But I notice too often people don’t “learn” from their tax advantaged accounts. They don’t gain lessons. And they rarely progress. Something has to compete with your bills with after tax non retirement money. Even if it is small. I see people pumping everything into 401k, the. Come retirement time they just take RMD’s… they didnt learn the lessons.
I think you should consider a few other variables. 1) My 2.6% COLA ~ after Medicare ~ was so small I won’t bother to calculate it! The moral of this story: you will be a negative run rate day one. 2) RMD’s. This is when you have to pay the tax on all the money you’ve saved. I make my first RMD this coming year, and my Certified Fiancial Planner (free via Fidelity) said I could estimate 4% per year tax to be paid on RMD’s. Be mindful this percentage was a guesstimate. I’ll get more of a feel (hopefully) this time next year.
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.