RMD Withdrawal strategies
Hi Terry – I’m hoping this is of general interest. Regarding the IRA cash bucket approach, others suggest holding anywhere from 1-3 years of cash for future RMD withdrawals in the IRA’s MMA. So as not to forego too much of the potential growth of a balanced fund inside the IRA, one year’s cash seems right to me. How many years cash for RMDs do you suggest?
Also, if one has this year’s RMD amount in cash in the IRA MMA, when would you take the RMD, if not needed for living expenses? Thank you!
Terry Says
It all depends on how much risk you want to take with your investments, but I think two years cash is enough — unless you want to be more conservative and sleep better at night!
It’s up to you when to take the withdrawal for next year. Just be sure to calculate the amount based on your December year-end statement. And I’d suggest withholding taxes when you do the withdrawal(s). If it’s in cash it won’t matter when you take it as long as you take it on time.
Read this column: https://www.terrysavage.com/calculating-your-rmd/
