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RMD-- Is this the time to take it? #5362578 02/28/20 04:29 PM
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csandste Online Content OP
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Because I've put a lot of 457 money into an IRA, I have too much money in there and am taking it in the neck on income taxes. I've been putting about ten grand a year from my regular IRA into my Roth after making the RMD, but a normal projected RMD shows my almost doubling my RMD as accounts appreciate and I get older with less time to clean it out.

Under normal circumstances I would think this is the worst time possible to be even looking at my accounts, I have no desire to invest new money in this market. Tried to catch enough falling knives in my younger years.

However, if I took my RMD now and moved it into my regular accounts and added some additional money from my regular IRA into my Roth on top of that, I would, at least be getting more shares out of my IRA now. Same (required) money out of my IRA and into my regular account and Roth now would mean fewer shares and lower RMD payments in the future. If I traded depreciating index funds in my IRA for similar depreciating index funds in my regular accounts and Roth, I wouldn't really be trying to time the market because the underlying investments would be the same. I'd just be moving more money out of my regular IRA and lessening my future payments to Uncle Sam in exchange for no-tax Roths or capital gains regular accounts.

Does this make sense? Or.....


2017 Kia Soul+ Valvoline Daily Protection 5w30+ a bit of Harvest King syn 5w30-- 75,000 miles
Re: RMD-- Is this the time to take it? [Re: csandste] #5362641 02/28/20 05:50 PM
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If you don't take the Required Minimum Distribution you will, indeed, take it in the neck on punitive taxes. So, that should not even be in question. When you take money out of a traditional IRA you create a taxable event. You have to pay taxes on that money and I don't know any way to avoid that. If you put that into a Roth the advantage is you don't have to pay taxes on the money when you take it out. My question is: why don't you just enjoy the money, buy a car, eat out more, go on a vacation?? If you don't have any real use for the money now, put in in a regular trading account. If you don't want to take any risk with the money in your trading account, put it in short term treasury bond funds.


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Re: RMD-- Is this the time to take it? [Re: csandste] #5362656 02/28/20 06:24 PM
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I'm comfortable with my life style and investing mix. You can't throw it into a Roth until the RMD is taken. I just wondered if using depressed prices to maximize shares sold (not money, that's fixed) would minimize future tax liability if total investment balance doesn't change.


2017 Kia Soul+ Valvoline Daily Protection 5w30+ a bit of Harvest King syn 5w30-- 75,000 miles
Re: RMD-- Is this the time to take it? [Re: csandste] #5362659 02/28/20 06:34 PM
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It's funny....I have the same question as the OP....is it better to move $$ from a 457 (which tax is owed on) to a ROTH 401 (going into the exact same funds) now...and take the (approx.) 28% tax hit now (when fund prices have dropped)...or does it matter whether fund prices are high or low? With the younger population desiring socialism...I don't see tax rates going lower in the future....somebody has to pay for all that 'free stuff'?


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Re: RMD-- Is this the time to take it? [Re: csandste] #5362681 02/28/20 07:04 PM
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If you are in to RMD time and the RMD is not only affecting your tax bracket but your SS by kicking you into the 85% crowd and your Medicare penalties you might just want to take a 1 year kick in the *** by the Fed and move it all to a Roth. If the market keeps falling you will lose a bit when selling but you can buy the same stuff back at a discount 2 days later.

Re: RMD-- Is this the time to take it? [Re: csandste] #5362700 02/28/20 07:42 PM
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Sounds like you need to talk to a financial advisor, not folks on a forum.


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Re: RMD-- Is this the time to take it? [Re: pbm] #5362704 02/28/20 07:45 PM
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Originally Posted by pbm
It's funny....I have the same question as the OP....is it better to move $$ from a 457 (which tax is owed on) to a ROTH 401 (going into the exact same funds) now...and take the (approx.) 28% tax hit now (when fund prices have dropped)...or does it matter whether fund prices are high or low? With the younger population desiring socialism...I don't see tax rates going lower in the future....somebody has to pay for all that 'free stuff'?

Flee from a 457 as quickly as you can. I was a governmental CEO and even I couldn't figure out all the hidden fees. Many more than in a 401k, and far less competition.


2017 Kia Soul+ Valvoline Daily Protection 5w30+ a bit of Harvest King syn 5w30-- 75,000 miles
Re: RMD-- Is this the time to take it? [Re: Bud] #5362712 02/28/20 07:50 PM
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csandste Online Content OP
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Originally Posted by Bud
Sounds like you need to talk to a financial advisor, not folks on a forum.

I'm crowd sourcing. I've had universal negative experience with people purporting to be financial managers although i have eaten some of their free meals. i did pose this question to the manager of my brokerage and may kick it up to Bogleheads.

Last edited by csandste; 02/28/20 07:53 PM.

2017 Kia Soul+ Valvoline Daily Protection 5w30+ a bit of Harvest King syn 5w30-- 75,000 miles
Re: RMD-- Is this the time to take it? [Re: samven] #5362724 02/28/20 07:56 PM
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Originally Posted by samven
If you are in to RMD time and the RMD is not only affecting your tax bracket but your SS by kicking you into the 85% crowd and your Medicare penalties you might just want to take a 1 year kick in the *** by the Fed and move it all to a Roth. If the market keeps falling you will lose a bit when selling but you can buy the same stuff back at a discount 2 days later.

Good point. Run through the fire pit as quickly as possible. I have near identical index products on both sides of the line. The difference in a Vanguard and a Schwab index will get you a ham sandwich after a decade.


2017 Kia Soul+ Valvoline Daily Protection 5w30+ a bit of Harvest King syn 5w30-- 75,000 miles
Re: RMD-- Is this the time to take it? [Re: csandste] #5362863 02/28/20 10:44 PM
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pbm Offline
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Originally Posted by csandste
Originally Posted by Bud
Sounds like you need to talk to a financial advisor, not folks on a forum.

I'm crowd sourcing. I've had universal negative experience with people purporting to be financial managers although i have eaten some of their free meals. i did pose this question to the manager of my brokerage and may kick it up to Bogleheads.

I have spoken to a few FA....they seem to push converting to a ROTH and buying whole life insurance...and charge a hefty fee for doing it for you...


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Re: RMD-- Is this the time to take it? [Re: csandste] #5362940 02/29/20 12:43 AM
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repost by mistake, sorry.

Last edited by csandste; 02/29/20 12:45 AM.

2017 Kia Soul+ Valvoline Daily Protection 5w30+ a bit of Harvest King syn 5w30-- 75,000 miles
Re: RMD-- Is this the time to take it? [Re: csandste] #5362983 02/29/20 04:25 AM
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Originally Posted by csandste


However, if I took my RMD now and moved it into my regular accounts and added some additional money from my regular IRA into my Roth on top of that,

"I would, at least be getting more shares out of my IRA now."

Same (required) money out of my IRA and into my regular account and Roth now would mean fewer shares and lower RMD payments in the future. If I traded depreciating index funds in my IRA for similar depreciating index funds in my regular accounts and Roth, I wouldn't really be trying to time the market because the underlying investments would be the same. I'd just be moving more money out of my regular IRA and lessening my future payments to Uncle Sam in exchange for no-tax Roths or capital gains regular accounts.

Does this make sense? Or.....


I'm with others that suggest guidance from your accountant at minimal, but sounds like you have enough money to need professional financial adviser advice. As you know, you must be of age to be required to take an RMD, should be 70 1/2 I believe. Its hard enough getting anyone to agree on 0w20 vs 5w20 vs 5w30, let alone brands or what color jugs are the best. lol, that sounded so dirty...

I'm only going to pick on the sentence that I put in quotations. Your retirement acct RMD is only based upon a dollar value amount, and your estimated life expectancy, not amount of shares. Your objective should be to keep as many shares as possible, and receive the highest possible price for your shares, but as we see looking in the rear view mirror that time was week before last, and will probably not be back to that level till after the elections if # 45 is re elected. I would strongly suggest you wait for even a "Dead cat bounce" which will happen in a few days if you wish.

This may very well be the pre election correction that has come very early, but has something to blame for the timing, then again, we maybe in for a world wide recession and another 10% down at some point before November. No one has a crystal ball, I wish we did!


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Re: RMD-- Is this the time to take it? [Re: csandste] #5363042 02/29/20 07:20 AM
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I wonder if you'd get better responses over on bogleheads forum? At least over there they're dedicated to money matters.

I'm decades from worrying about RMD's so I don't know how they "work". But could you just take the money out, leave in a bank account for now, wait until the economy bottoms out, then just invest in an index fund? Or invest however you see fit today? I mean, you only have to take it out, you don't actually have to spend it, right? Any growth becomes taxable etc, but you don't have to set it on fire either.


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Re: RMD-- Is this the time to take it? [Re: csandste] #5363057 02/29/20 08:03 AM
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Take it and enjoy the money.

If you’re retired enjoy a vacation to ___ .

Re: RMD-- Is this the time to take it? [Re: supton] #5363180 02/29/20 10:05 AM
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Originally Posted by supton
I wonder if you'd get better responses over on bogleheads forum? At least over there they're dedicated to money matters.

I'm decades from worrying about RMD's so I don't know how they "work". But could you just take the money out, leave in a bank account for now, wait until the economy bottoms out, then just invest in an index fund? Or invest however you see fit today? I mean, you only have to take it out, you don't actually have to spend it, right? Any growth becomes taxable etc, but you don't have to set it on fire either.

As Jack Bogle said, never try to time the market. I'm very conservstively invested as of 2018, I intend to not change my investment profile, simply trying to shift it out of my regular IRA. My advice to younger people is to take a 401k up to the match, maximize any Roth and pay capital gains on other investments. My taxes have tripled since retirement cause I deferred half my income. Of course who knows what the tax code will be in twenty years.

Last edited by csandste; 02/29/20 10:13 AM.

2017 Kia Soul+ Valvoline Daily Protection 5w30+ a bit of Harvest King syn 5w30-- 75,000 miles
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