Time for required didtributions
Terry, I read your piece in the Richmond Times Dispatch this morning and was surprised that you did not mention two items.
First, you can move a security in your IRA account to your regular brokerage account and it’s value on the move date counts as part of your RMD. For Some reason people don’t seem to know about this possibility.
Second, you can have your IRA custodian send a donation directly to a charity and that amount can be excluded from what otherwise would be Ordinary Income, but still count as part of your RMD. This option is particularly attractive for taxpayers who take the Standard Deduction.
Based on the above it may sound like I’m not a fan of yours, but I am!
Terry Says
There is no reason to “move” your IRA to a regular brokerage account, because all withdrawals from an IRA are considered ordinary taxable income. Even if you own stocks in your IRA and want to transfer them, you will have a new cost basis –same as if you sold, withdrew the RMD in cash as ordinary income, paid the taxes, and then repurchased the shares. In fact, I doubt many firms will accept that kind of transfer because you are supposed to receive a 1099 reflecting the value of the distribution.
Stay tuned for my annual article reminding people about taking RMDs as charitable distributions. It’s a great idea if you don’t need the cash from the RMD, and want to avoid taxes.
