Reddit Posts
Do I need a FA to get my annual RMD from an inherited IRA?
Advice needed on portfolio management choices
Xiaomi assets equals dept to the precision of last stated digit in Q2 2023
40y/o, 52k in my Roth IRA split between $36k in FSKAX, 6.5k in Microsoft 17.5k Tesla and about 7k in “cash available to trade”. Should I go all in on Tesla?
How are Required Minimum Distributions paid out when the funds are invested in stocks?
Ray Liotta died in his sleep at age 67. He probably had a heart attack. If he had a heart attack, it was probably caused by undiagnosed sleep apnea. Sleep apnea affects close to a billion people worldwide and goes undiagnosed in 80% of cases. Save lives, long Resmed (RMD).
Ray Liotta died in his sleep at age 67. He probably died from undiagnosed sleep apnea. Save lives, long Resmed (RMD).
Ray Liotta died in his sleep at age 67. He probably had a heart attack. If he had a heart attack, it was probably caused by undiagnosed sleep apnea. Sleep apnea affects close to a billion people worldwide and goes undiagnosed in 80% of cases.
Does Government's Forced Rothifying of Catch Up Contributions Change The Conventional Wisdom About Roth's In Your 20's?
Sleep stocks, specifically sleep apnea stocks, will do quite well the next decade.
Sleep stocks, specifically sleep apnea stocks, will do quite well the next decade.
Sleep stocks, specifically sleep apnea stocks, will do quite well the next decade.
Sleep stocks, specifically sleep apnea stocks, will do quite well the next decade.
Sleep stocks, specifically sleep apnea stocks, will do quite well the next decade.
Sleep stocks, specifically sleep apnea stocks, will do quite well the next decade.
Sleep stocks, specifically sleep apnea stocks, will do quite well the next decade.
Sleep stocks, specifically sleep apnea stocks, will do quite well the next decade.
Where's my snorers at? The bullish case for sleep apnea stocks.
Why is no one talking about RMD? Almost up 13% in the last week alone
RMD is gonna Rise. Recall Immenent for Respironics.
The Initial Stock Challenge: Search for the stock with the same ticker tag as your initials.
Mentions
Already do. But you see Uncle Sam has this thing called RMD....
I’m already very long on SYK, RMD and DXCM. ADBE has fallen so far it’s now on my watchlist. I’ve never seen the appeal of MSFT, and still don’t. But I invest in stability. And at the moment the world is more unstable than it has ever been in my lifetime. I’ve done some judicious trimming, and have a decent amount set aside for when I feel comfortable buying again. But I’m not buying anything right now.
A traditional 401K will reduce your taxes now. You will pay the tax later when you withdraw from it as fully taxable. You don't get a choice about withdrawing from the 401K balance. There are Required Minimum Distributions (RMD) that currently start at age 73. The RMD start age is scheduled to go up in coming years. There is also no step up basis for inherited 401Ks. It is all fully taxable whether you are alive or dead. I can say with certainty that the forced RMDs are painful for taxable distributions of money I don't currently even need. The RMDs bumped me up into the next tax bracket. With a traditional 401K you will be subject to unknowable changes in tax rates well into the future. With a Roth IRA or 401K you pay taxes on the money yearly before it goes into the account and there are no taxes at all on withdrawals of gains at the allowed age. By the current law that is a sure thing that you can count on. But don't forget that some years ago they changed the taxability of Social Security so that up to 85% of it is taxable as ordinary income because they think you make too much. Never underestimate the ability and willingness of the government to screw you. We have a huge, unprecedented national debt. At some point they will have to do something about it. With the unknowability of future tax rates there is no way to calculate with certainty which is better. I would and did hedge my bet and did some of each. Withdrawing a $200K lump sum from a trad 401K may not be the wisest way to do it for taxes. That $200K will all be taxable as ordinary income in the year that you take the distribution. That will be a huge tax bill, especially if it bumps you into the next tax bracket.
"it's a no brainer" . You're completely ignoring the effects of RMDs and IRMAA. It comes down to how much you'll have in a traditional 401k (plus other taxable income) when RMD's kick in.
Ok, but what does that have to do with RMDs? Like imagine the RMD rule went away. What would your approach be?
I didn’t forget that at all, actually. I explain it in terms of the compound growth formula here: https://www.reddit.com/r/investing/s/eM44h3yWQU Basically, in a taxable account, dividends/distributions are taxed yearly and that crimps your growth rate. Capital gains is a second tax on money you’ve earned and grown (vs Roth which is only taxed once every). That crimps your growth rate further in a “not nice mathematically” way, but it’s also fine to ignore because the growth rate reduction is more important. IRA withdrawal tax is a one-time multiplier vs the yearly multiplier of annual growth rate. I’d rather have a higher growth rate. Also RMD is a limit to duration. I’d rather have unlimited duration. Roth maximizes growth rate and duration. Traditional maximizes principal (and not by a lot).
This is terrible financial advice. Yes, you pay more upfront and it appears that your "assets pot" is smaller, however, the *buying power* of that pot in retirement turns out to be significantly greater, because every dollar in Roth is actually worth a dollar. In a traditional IRA, your buying power is significantly reduced by taxes on withdrawal, plus required minimum distributions (RMD) which forces you to withdraw and pay taxes. These RMDs and taxes are significant if your strategy is to "maximize". In most cases, Roth gives you more buying power in the long run, plus has extra advantages with no RMD after you retire, so your investments can continue growing tax-free as long as you live. And then more extra advantages beyond your death where your investments can continue to grow tax-free for your heirs. The way you should be thinking about the taxes on Roth contributions is that it's allowing you to put more of your "pretax" earnings into a shelter where it will never be taxes again.
At your income level a traditional 401K is probably the best move. Some money in a Roth is fantastic, but I believe your top dollar is in the 22% bracket. For simplicity in 20 years: $25k becomes $100K with taxes due $20K Roth becomes $80K. Tax Free. The kicker is the $5K you paid in taxes in your example becomes $20K. So you have a $120K traditional vs $80K Roth So your marginal tax rate would have to be at 33.33% to brake even. I know IRMA, RMD and value of a dollar in 20 years play into this. This is why we diversify.
That would’ve helped today you, but not necessarily future you. Hint: someday you’re gonna grow up and be future you ;) If I could go back and do it all again, I would do most of my traditional contributions as Roth contributions. When you’re possibly being forced to pay extra for your Medicare in the future and also having to take RMD‘s you might regret taking that savings now (the extra income from the RMD’s can also trigger the increase cost in Medicare). Google IRMAA to find out more about those increased medical costs.
I have several. I’ve only been consolidating them (1) into the account I actively manage myself and (2) to facilitate administration of the RMD when I turn 72
Yikes. I don’t like mom and pops. Not enough safeguards normally. I would speak with Fidelity or Vanguard. I doubt they are adding anything to investments. They are likely overpaying anyways for just RMD and treading water. If this is a meme ver of their community you’re likely stuck until the transition of assets.
Retirement accounts are not mutually exclusive. 401ks have a much bigger contribution limit than IRAs. There are specific reasons why someone would want to max their Roth IRA first, primarily people in lower tax brackets, but otherwise it's better to prioritize 401ks first. Ultimately you want to max all your retirement accounts. A brokerage account is more practical to give to your children while you're still alive, but they do not benefit from tax savings. There are step-up basis and RMD that you need to understand before deciding what works best for you. My advice is that if you haven't met your own retirement goal, focus on that first before thinking about saving for your children. They can borrow money, you can't.
I was eligible at 66 delayed for two years and collected at 68 years old! I think it was a good compromise, not reaching into my IRA. I did burn through my cash though however we also traveled a lot. The nice thing is now I really don't have a need to dip into my IRA still because of the extra cash only if I feel like splurging. Of course this year I start my first RMD. I think this is when you wish you had withdrawn more so you didn't have to pay so many taxes against your will!
70 is the last possible "sensible" year to take SS. There is no longer a benefit past 70 since you receive no more for waiting past this age. 73 is the year RMD's begin if born between 1/1/1951 and 12/31/59. RMD's begin at 72 if born before 1950. They begin at age 75 if born in 1960 or later.
I took mine at 64 when my unemployed ran out. I won't have to touch my investments until I am forced to take RMD'S. Letting your investments grow isn't taken into the breakeven number.
You mean you’re tired of the marketing. AI is just in its infancy. It’s able to now improve upon itself. I used AI in December to help strategize some financial moves. It helped me project out 30+ years and may potentially save me millions in forced RMD taxes. I’m thinking it might able to handle filing my tax returns too. Haven’t done this yet but I’d bet it can do any legal documents too such as will and testament, durable power of attorney, etc, etc. TLDR; the AI revolution is just starting.
Seems like a reasonable plan if the numbers work out for you. Never thought about borrowing against a brokerage account. Seems kind of risky if the market performs poorly. Just note that you won't need to start RMD's until age 75 if you were born after 1960. As for the other considerations: 1. I misspoke. My money (>90%) is mostly in a rollover IRA, which I can start pulling from in \~20 months without penalty. 2. If I expatfire, no need for ACA. Will either get an international plan or self-insure 3. Part of my rationale for saving the inheritance money is so that I can utilize some of these tax strategies over time. Never really occurred to utilize debt as part of that strategy, but might be useful
It occurs to me that another option would be to follow the traditional path of spending cash first, and then putting excess RMD money into the brokerage account. This seems like it would be best if I live longer, but not so good if I die before \~80
RMD - ResMed average 30% growth per year for 10 years plus a small dividend. And almost all of my biotech and medical stocks save the big names and never mentioned here. No one here discusses biotech and medical devices but those are recession proof.
Correct. If all goes well I hope not to withdraw from anything until SO is 75 so in about 10 years and then only a mandatory RMD. SO is still working and likes what he does and would go nuts sitting home (as would I if he was sitting home!) One of his friends is 83 in the same job and refuses to retire, another is 73 and still likes it. The point is that I CAN take it tomorrow without any additional penalties if I choose to. Often when people respond to someone retiring at say 40, they have to worry about being able to access their retirement funds, and that gets part of the focus of the question, that is not an issue here. Although we are older, we are still in the accumulation phase rather than the capital preservation living on dividends phase. However, because we are older, I worry about risk more than I would have if I was 35 and had many years to weather a correction
Life is good. The biggest concern was healthcare and not knowing what will happen with costs. I have enough "cash" that I will not do any RMD until I am 72. It is just controlling the wind down. Tomorrow I head to Florida for 2+ weeks to enjoy spring training totally stress free.
At 32, VTI all the way. One thing to consider with 403b are taxes with RMD. Are you contributing to a Roth as well? Also consider is slowly rolling over your 403b into your Roth when you’re 59.5. Again, those pesky taxes
I have to withdraw from the IRA. BDA, RMD.
Yes, I could increase the annual or bi-annual RMD withdrawals to pay down the mortgage quicker, without taking the big tax hit of withdrawing it all at once.
"I have an IRA that requires RMD withdrawals with about five more years left before it has to be fully depleted." So you've been drawing down your IRA in addition to your RMD's? Given that RMD's start at age 72, the question begs why someone would still have a mortgage at that age? Everyone's situation is different, but if you haven't paid off the mortgage and you're 72 or older, then I would just keep on paying the mortgage and save the money for other purposes.
Yes, that's my dilemma: There's not a clear cut answer here. Typically, I don't mind a reasonable amount of debt if I can earn more on someone else's money. When the market is robust and interest rates are low, debt is a useful tool, albeit with risk. But now, with the bull party looking like it may soon lose steam, taking some cash out to reduce debt (my mortgage) might be the smart play. Regardless, in five more years, I'll need to meet the RMD deadline, so why not put that money to use now.
[https://cnevpost.com/2026/01/07/byd-to-add-long-range-variants-4-hybrid-models/](https://cnevpost.com/2026/01/07/byd-to-add-long-range-variants-4-hybrid-models/) for the range part. 100000 RMD is 14000 USD
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.