RMD withdrawl
I will be turning 73 next year and need your thoughts on my plan. Currently I have not had to withdraw any money from my IRA since I retired 9 years ago as we live comfortably off pensions and Social Security ( which I waited 2 years to collect at 68). I am invested entirely in Vanguard mutual funds. Wellsly, Total Stock, Total International Stock and a couple others. I have always reinvested my dividends. In adding up my yearly dividends it comes to approximately $45,000.00. My projected RMD is approximately $45,000.00. If I divert my dividends to my Vanguard money market fund I can use the money to satisfy my RMD without having to sell any shares of my holdings. Your thoughts? TYIA
Terry Says
Are those dividends paid to funds INSIDE your IRA? That’s been a great way to build your retirement assets.
Next year you will look at the total balance inside ALL your IRAs, as of the end of December, 2025 — and will use that amount in the formula to calculate your RMD. That first RMD should be taken next year, before year end.
Read this column: https://www.terrysavage.com/rmd-time-2/
The money will come out of your IRA taxed as ordinary income. Be sure to ask them to withhold some for income taxes.
If your dividends are paid on stocks/funds held OUTSIDE your IRA, they have absolutely NO bearing on your RMD. And no you cannot “contribute” them to your IRA — unless you have “earned income from work.” In that case you could contribute up to $8,000 to an IRA next year, even as you are required to withdraw.
