RMD's: take distributions vs selling

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jimmieg
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RMD's: take distributions vs selling

Post by jimmieg » Sun Aug 12, 2018 12:46 pm

Now that I am in the RMD phase, is there any advantage to simply stopping reinvestments to accumulate cash for withdrawal vs selling a position at one time for withdrawal?

Beehave
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Re: RMD's: take distributions vs selling

Post by Beehave » Sun Aug 12, 2018 1:28 pm

If you don't have cash in your 401k or IRA, then I think it is prudent to accumulate some. That way if stocks go down you will not be forced to sell for your next RMD. You can also use bonds, but my preference is safe, liquid cash, especially now that money market funds are actually paying some interest.

Best wishes.

TravelforFun
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Re: RMD's: take distributions vs selling

Post by TravelforFun » Sun Aug 12, 2018 1:38 pm

jimmieg wrote:
Sun Aug 12, 2018 12:46 pm
Now that I am in the RMD phase, is there any advantage to simply stopping reinvestments to accumulate cash for withdrawal vs selling a position at one time for withdrawal?
You're required to withdraw a certain amount by RMD, if you need more than the withdrawal to live on then, yes I would stop the reinvestment.

TravelforFun

Ron
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Re: RMD's: take distributions vs selling

Post by Ron » Sun Aug 12, 2018 1:50 pm

For us, from a previous thread:

"We took our respective RMD's this year (we're the same age) in January, by selling off holdings that did well in the market last year. This year (and going forward), there is no guarantee that we're going to have the gains to sell to satisfy next year's RMD's. Rather than work our respective accounts to sell off profits and accumulate cash for next year's projected RMD's, we're just going to have the cash accumulate. Our respective cash withdrawals will be used to pay FIT on our RMD's, along with paying FIT on all our other taxable income (SS, pensions, SPIA). Any cash left over will simply be invested in taxable funds for each of us. This also makes it a bit easier for me for tracking those funds that should be sold during the year in order to meet the RMD/tax needs of next year. As I'm getting older than dirt, I want to simplify things a bit. I/we continue to be total return investors in our respective Roth IRA's."

- Ron

ryman554
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Re: RMD's: take distributions vs selling

Post by ryman554 » Sun Aug 12, 2018 2:03 pm

Beehave wrote:
Sun Aug 12, 2018 1:28 pm
If you don't have cash in your 401k or IRA, then I think it is prudent to accumulate some. That way if stocks go down you will not be forced to sell for your next RMD. You can also use bonds, but my preference is safe, liquid cash, especially now that money market funds are actually paying some interest.

Best wishes.
Who says you have to sell? Transfer in kind

Or if you can't do that, then sell in IRA, no tax cost, take distribution and repurchase in taxable. Haven't sold low at all.
Last edited by ryman554 on Sun Aug 12, 2018 2:04 pm, edited 1 time in total.

John Z
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Re: RMD's: take distributions vs selling

Post by John Z » Sun Aug 12, 2018 2:04 pm

jimmieg wrote:
Sun Aug 12, 2018 12:46 pm
Now that I am in the RMD phase, is there any advantage to simply stopping reinvestments to accumulate cash for withdrawal vs selling a position at one time for withdrawal?
Since you are in withdrawal mode you may want to examine a dozen or so withdrawal strategies presented by McClung in his book Living Off Your Money. You can download the first 3 chapters for free and examine the table of contents to see if you have further/deeper interest in learning about the couple of optimum withdrawal strategies.

http://livingoffyourmoney.com/

MathIsMyWayr
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Re: RMD's: take distributions vs selling

Post by MathIsMyWayr » Sun Aug 12, 2018 2:14 pm

If you are in an enviable position of withdrawing only because of RMD, i.e., you don't need it for expense, is there any advantage of accumulating cash? You may move whatever in your account, preferably equity, for RMD to a taxable account. Or you may sell and buy a similar fund back in a taxable account.

Ron
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Re: RMD's: take distributions vs selling

Post by Ron » Sun Aug 12, 2018 2:20 pm

ryman554 wrote:
Sun Aug 12, 2018 2:03 pm
Who says you have to sell? Transfer in kind

Or if you can't do that, then sell in IRA, no tax cost, take distribution and repurchase in taxable. Haven't sold low at all.
I don't understand. Unless you have $$$ already in taxable to cover taxes due, you have to pay FIT (and possibly state/local income tax) on your IRA RMD withdrawal.

- Ron

sport
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Re: RMD's: take distributions vs selling

Post by sport » Sun Aug 12, 2018 2:24 pm

I don't want to take my RMD at the beginning of the year because I want to have some room for QCDs that may arise. I also do not want to risk my holdings dropping substantially before I want to take the RMD. My solution for this is to transfer an amount equal to my RMD into Vanguard's Ultra Short Term Bond fund within my IRA in January. I then make my RMD withdrawals and QCDs from that fund, at any time during the year that it suits me.

jimmieg
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Re: RMD's: take distributions vs selling

Post by jimmieg » Sun Aug 12, 2018 3:14 pm

Thanks for the many good ways suggested to handle this! Appreciate this board.
Jim

ryman554
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Re: RMD's: take distributions vs selling

Post by ryman554 » Sun Aug 12, 2018 5:33 pm

Ron wrote:
Sun Aug 12, 2018 2:20 pm
ryman554 wrote:
Sun Aug 12, 2018 2:03 pm
Who says you have to sell? Transfer in kind

Or if you can't do that, then sell in IRA, no tax cost, take distribution and repurchase in taxable. Haven't sold low at all.
I don't understand. Unless you have $$$ already in taxable to cover taxes due, you have to pay FIT (and possibly state/local income tax) on your IRA RMD withdrawal.

- Ron
Selling in IRA and buying in taxable is no net tax cost for gains or anything. (Ok, there are esoteric wash sale rules to worry about)
You are correct that the withdrawal form IRA results in taxable income that must be paid. Folks aren't generally 100% equity in retirement, so there should be some CD or bond somewhere.

The point is, nobody should ever be forced to sell low when doing RMD, regardless of account. Money in IRA is completely fungible and investments can get bought and sold with no tax ramifications.

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munemaker
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Re: RMD's: take distributions vs selling

Post by munemaker » Sun Aug 12, 2018 5:53 pm

ryman554 wrote:
Sun Aug 12, 2018 5:33 pm
Ron wrote:
Sun Aug 12, 2018 2:20 pm
ryman554 wrote:
Sun Aug 12, 2018 2:03 pm
Who says you have to sell? Transfer in kind

Or if you can't do that, then sell in IRA, no tax cost, take distribution and repurchase in taxable. Haven't sold low at all.
I don't understand. Unless you have $$$ already in taxable to cover taxes due, you have to pay FIT (and possibly state/local income tax) on your IRA RMD withdrawal.

- Ron
Selling in IRA and buying in taxable is no net tax cost for gains or anything. (Ok, there are esoteric wash sale rules to worry about)
You are correct that the withdrawal form IRA results in taxable income that must be paid. Folks aren't generally 100% equity in retirement, so there should be some CD or bond somewhere.

The point is, nobody should ever be forced to sell low when doing RMD, regardless of account. Money in IRA is completely fungible and investments can get bought and sold with no tax ramifications.
Well, if it is a traditional IRA (that you once took deductions for the contributions), you do have to pay federal income tax on the RMD itself.

But your point is well taken. I have seen posters on here saying they don't know what to do with the money from the RMD. Well, you don't have to do anything with it. If it is in VTSAX in your traditional IRA, you just invest the amount of the RMD in VTSAX in your taxable account. There is no rule that you have to spend the money, as some people seem to believe.

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Re: RMD's: take distributions vs selling

Post by The Wizard » Sun Aug 12, 2018 11:49 pm

People here make RMDs waaaay too complicated.

I've been withdrawing/Roth-converting a few thousand a month from tax deferred since 2013 in lieu of claiming personal SS.
I've been doing pro rata withdrawals from my allocation of 55% to 60% stock funds.
I hold no cash or MM funds whatsoever in tax deferred.

I turn 70.5 in 2020 and will be starting both SS and RMDs that year. My RMDs look to be a chunk LESS than what I've been withdrawing the past 5+ years, so I will simply stop Roth conversions and reduce my monthly withdrawals to meet my RMD number each year.
I will continue to do pro rata withdrawals from my 60/40 tax deferred account with no cash or MM funds...
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Re: RMD's: take distributions vs selling

Post by The Wizard » Sun Aug 12, 2018 11:55 pm

ryman554 wrote:
Sun Aug 12, 2018 5:33 pm
...The point is, nobody should ever be forced to sell low when doing RMD, regardless of account...
Why not?
Let's say stocks drop 20% or 30%.
So you sell low in your tax deferred account and almost simultaneously buy similar funds in your taxable account.
I don't see a problem...
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Re: RMD's: take distributions vs selling

Post by The Wizard » Mon Aug 13, 2018 12:10 am

ryman554 wrote:
Sun Aug 12, 2018 5:33 pm
...Money in IRA is completely fungible and investments can get bought and sold with no tax ramifications.
Money in your IRA is not "fungible".
What's fungible is: my monthly SS amount and monthly RMD amount starting in 2020 are expected to be comparable in size (SS several hundred $$ larger).

So maybe I'm reinvesting my entire SS check in my taxable account because my total age 70+ income exceeds my needs.
Or maybe I'm reinvesting my entire RMD for the same reason.
Which one is it?
Does it matter?
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celia
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Re: RMD's: take distributions vs selling

Post by celia » Mon Aug 13, 2018 12:31 am

MathIsMyWayr wrote:
Sun Aug 12, 2018 2:14 pm
If you are in an enviable position of withdrawing only because of RMD, i.e., you don't need it for expense, is there any advantage of accumulating cash? You may move whatever in your account, preferably equity, for RMD to a taxable account. Or you may sell and buy a similar fund back in a taxable account.
Yes, if you own stocks/ETFs in your IRA, if you withdraw in kind, you have to withdraw whole shares. Rarely will that be equal to your RMD, since the share prices change all day long. But you can remove some shares in kind (while avoiding buy/sell commissions). A day or two later, if you see the value of the distribution for your RMD was not enough, you can remove the rest of the RMD from the cash.

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celia
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Re: RMD's: take distributions vs selling

Post by celia » Mon Aug 13, 2018 12:38 am

Ron wrote:
Sun Aug 12, 2018 2:20 pm
ryman554 wrote:
Sun Aug 12, 2018 2:03 pm
Who says you have to sell? Transfer in kind

Or if you can't do that, then sell in IRA, no tax cost, take distribution and repurchase in taxable. Haven't sold low at all.
I don't understand. Unless you have $$$ already in taxable to cover taxes due, you have to pay FIT (and possibly state/local income tax) on your IRA RMD withdrawal.
You can have taxes withheld from another income source, such as SS or your pension, or from selling a taxable investment the same year. Also note that the sale or an asset in your IRA does not impact your taxes, just the withdrawal/conversion from the IRA.

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Re: RMD's: take distributions vs selling

Post by ryman554 » Mon Aug 13, 2018 8:34 am

The Wizard wrote:
Sun Aug 12, 2018 11:55 pm
ryman554 wrote:
Sun Aug 12, 2018 5:33 pm
...The point is, nobody should ever be forced to sell low when doing RMD, regardless of account...
Why not?
Let's say stocks drop 20% or 30%.
So you sell low in your tax deferred account and almost simultaneously buy similar funds in your taxable account.
I don't see a problem...
Didn't you just agree with me?

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Re: RMD's: take distributions vs selling

Post by ryman554 » Mon Aug 13, 2018 8:39 am

The Wizard wrote:
Mon Aug 13, 2018 12:10 am
ryman554 wrote:
Sun Aug 12, 2018 5:33 pm
...Money in IRA is completely fungible and investments can get bought and sold with no tax ramifications.
Money in your IRA is not "fungible".
What's fungible is: my monthly SS amount and monthly RMD amount starting in 2020 are expected to be comparable in size (SS several hundred $$ larger).

So maybe I'm reinvesting my entire SS check in my taxable account because my total age 70+ income exceeds my needs.
Or maybe I'm reinvesting my entire RMD for the same reason.
Which one is it?
Does it matter?
Perhaps fungible is the wrong word... and I am unable to make a coherent argument. I will just say that it is the rare case, indeed, that somebody is forced to "sell low" in an IRA for RMD reasons. Since most folks keep far too many cash/equivalents, there are many options to keep the same (low values) investments intact in one's portfolio while satisfying the RMD requirement.

You pointed out one case of many.

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Re: RMD's: take distributions vs selling

Post by Ron » Mon Aug 13, 2018 10:00 am

ryman554 wrote:
Mon Aug 13, 2018 8:39 am
Perhaps fungible is the wrong word... and I am unable to make a coherent argument. I will just say that it is the rare case, indeed, that somebody is forced to "sell low" in an IRA for RMD reasons. Since most folks keep far too many cash/equivalents, there are many options to keep the same (low values) investments intact in one's portfolio while satisfying the RMD requirement.
But there are always exceptions to the rule (much like making the decision of when to take SS).

While being retired starting in early 2007, I was not subject to RMD's until this year. If I would have to take RMD's for 2008-09, the only advantage I would have had is that the balance in my TIRA would be much lower than the day I retired and therefore reducing the amount of the RMD.

It would had made little difference since I held no taxable funds nor much in taxable cash. Being down over $300K in 2008 and over $200K in 2009 in my TIRA holdings (doesn't include my wife's holdings) meant that I would have had to sell low to pay the taxes on my RMD. At that time, there was equal damage done to both my equity and bond holdings; there was no place to hide.

The fallacy in this discussion these days is that we're looking back over a decade of good returns. When the music stops, regardless of when in the future, there will be indeed those that have to sell at a loss to meet taxes on their future RMD's.

Back to the OP's question, that's the reason that I/wife have gone from total return investors to having our distributions going to cash. While cash is a poor "investment", you're really only talking about of a portion of the year that the cash will possibly under perform the equity/bond market. If you're talking about using the cash from distributions to pay your RMD and related taxes due in January with most distributions being done in the last quarter of the previous year, you're actually out the market for around three months. Using distributions to satisfy the requirement of annual RMD's along with the taxes due result in still maintaining the amount of shares in our funds over the long term.

FWIW,

- Ron

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Re: RMD's: take distributions vs selling

Post by Sheepdog » Mon Aug 13, 2018 10:06 am

jimmieg wrote:
Sun Aug 12, 2018 12:46 pm
Now that I am in the RMD phase, is there any advantage to simply stopping reinvestments to accumulate cash for withdrawal vs selling a position at one time for withdrawal?
To make it simpler, I do not reinvest in my tIRAs and take the RMDs and or QCDs from that.
It's not what you gather, but what you scatter which tells what kind of life you have lived---Helen Walton

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Re: RMD's: take distributions vs selling

Post by Sheepdog » Mon Aug 13, 2018 10:14 am

ryman554 wrote:
Mon Aug 13, 2018 8:39 am
I will just say that it is the rare case, indeed, that somebody is forced to "sell low" in an IRA for RMD reasons.
In 2008, I was forced to sell low for RMD (which was used for expenses), to my chagrin. It was very unpleasant. You can look at my very long thread from back then viewtopic.php?t=25126
It's not what you gather, but what you scatter which tells what kind of life you have lived---Helen Walton

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Re: RMD's: take distributions vs selling

Post by Earl Lemongrab » Mon Aug 13, 2018 2:58 pm

ryman554 wrote:
Sun Aug 12, 2018 5:33 pm
Selling in IRA and buying in taxable is no net tax cost for gains or anything. (Ok, there are esoteric wash sale rules to worry about)
That can't result in a wash sale. You have to sell for a tax loss. The other way around can be a problem.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

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Re: RMD's: take distributions vs selling

Post by ryman554 » Mon Aug 13, 2018 3:01 pm

Earl Lemongrab wrote:
Mon Aug 13, 2018 2:58 pm
ryman554 wrote:
Sun Aug 12, 2018 5:33 pm
Selling in IRA and buying in taxable is no net tax cost for gains or anything. (Ok, there are esoteric wash sale rules to worry about)
That can't result in a wash sale. You have to sell for a tax loss. The other way around can be a problem.
Yup, you're correct.

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Earl Lemongrab
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Re: RMD's: take distributions vs selling

Post by Earl Lemongrab » Mon Aug 13, 2018 3:02 pm

Sheepdog wrote:
Mon Aug 13, 2018 10:14 am
ryman554 wrote:
Mon Aug 13, 2018 8:39 am
I will just say that it is the rare case, indeed, that somebody is forced to "sell low" in an IRA for RMD reasons.
In 2008, I was forced to sell low for RMD (which was used for expenses), to my chagrin. It was very unpleasant. You can look at my very long thread from back then viewtopic.php?t=25126
No, you were forced to sell low because you needed money for expenses not because of the RMD. Otherwise you could have sold in the IRA and bought the same fund in taxable with little net difference.

I checked that thread, and it was mostly you about to capitulate due to the market crash. I don't even see you mention an RMD.
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Re: RMD's: take distributions vs selling

Post by ryman554 » Mon Aug 13, 2018 3:07 pm

Ron wrote:
Mon Aug 13, 2018 10:00 am
ryman554 wrote:
Mon Aug 13, 2018 8:39 am
Perhaps fungible is the wrong word... and I am unable to make a coherent argument. I will just say that it is the rare case, indeed, that somebody is forced to "sell low" in an IRA for RMD reasons. Since most folks keep far too many cash/equivalents, there are many options to keep the same (low values) investments intact in one's portfolio while satisfying the RMD requirement.
But there are always exceptions to the rule (much like making the decision of when to take SS).

...

It would had made little difference since I held no taxable funds nor much in taxable cash. Being down over $300K in 2008 and over $200K in 2009 in my TIRA holdings (doesn't include my wife's holdings) meant that I would have had to sell low to pay the taxes on my RMD. At that time, there was equal damage done to both my equity and bond holdings; there was no place to hide.

...
I wonder if I shouldn't just drop my shovel and quit digging.....

But, Ouch. Was there really the same amount of damage to bonds (treasuries) than equities? Unless you've got a lot of corporates in there, I thought the bond funds fared pretty OK due to the lower interest rates, but I'm too lazy to look them up (see hole, digging). So, yes, 2008 is a time when folks may have had to sell low for RMDs. Probably sometime in the late 60's did as well, no matter what you held.

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Re: RMD's: take distributions vs selling

Post by Sheepdog » Mon Aug 13, 2018 4:14 pm

Earl Lemongrab wrote:
Mon Aug 13, 2018 3:02 pm

No, you were forced to sell low because you needed money for expenses not because of the RMD. Otherwise you could have sold in the IRA and bought the same fund in taxable with little net difference.

I checked that thread, and it was mostly you about to capitulate due to the market crash. I don't even see you mention an RMD.
Your assumption is correct, but then you didn't know and understand.. I should have been more explicit. Maybe this will clear things up. I didn't, in that thread in 2008, expressly mention the RMDs, but the RMDs were part of the withdrawals and the RMDs were from mostly stock containing balanced funds.. In 2008, my RMD was 4.37%. (Today it is 6,78%) If you read in that thread, that year was when I increased my "safe funds". Part of those "safe funds" were within the tIRAs and that was the year I stopped reinvesting the IRA distributions and that is when I started taking the RMDs from those safe funds in the IRA..

This should also help explain.....At that time and still today, I had and have almost no taxable investments. The only taxable I had then and now are a small amount of CDs. ALL of my needs came then and come now from only my IRA distributions and SS, not from anything else.
Last edited by Sheepdog on Mon Aug 13, 2018 4:20 pm, edited 2 times in total.
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Re: RMD's: take distributions vs selling

Post by Earl Lemongrab » Mon Aug 13, 2018 4:18 pm

Ok, but again, it wasn't the RMDs forcing you do anything. You needed money to live on. And since you had both stocks and bonds you should have rebalanced after withdrawals. Using target funds is a choice not a mandate.
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Re: RMD's: take distributions vs selling

Post by Sheepdog » Mon Aug 13, 2018 4:23 pm

Earl Lemongrab wrote:
Mon Aug 13, 2018 4:18 pm
Ok, but again, it wasn't the RMDs forcing you do anything. You needed money to live on. And since you had both stocks and bonds you should have rebalanced after withdrawals. Using target funds is a choice not a mandate.
Last comment. I have no rebalancing to make as I used 'then and use now only balanced funds. Balanced funds do the rebalancing for me. I highly recommend them.
The end....
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Re: RMD's: take distributions vs selling

Post by Earl Lemongrab » Mon Aug 13, 2018 5:27 pm

Sheepdog wrote:
Mon Aug 13, 2018 4:23 pm
Earl Lemongrab wrote:
Mon Aug 13, 2018 4:18 pm
Ok, but again, it wasn't the RMDs forcing you do anything. You needed money to live on. And since you had both stocks and bonds you should have rebalanced after withdrawals. Using target funds is a choice not a mandate.
Last comment. I have no rebalancing to make as I used 'then and use now only balanced funds. Balanced funds do the rebalancing for me. I highly recommend them.
The end....
As I said, that's a choice you made. They don't do the rebalancing when you need to avoid selling stocks at a bad time.
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Re: RMD's: take distributions vs selling

Post by Sheepdog » Mon Aug 13, 2018 10:45 pm

Earl Lemongrab wrote:
Mon Aug 13, 2018 5:27 pm
Sheepdog wrote:
Mon Aug 13, 2018 4:23 pm

Last comment. I have no rebalancing to make as I used 'then and use now only balanced funds. Balanced funds do the rebalancing for me. I highly recommend them.
The end....
As I said, that's a choice you made. They don't do the rebalancing when you need to avoid selling stocks at a bad time.
Okay, that wasn't the end because of your comment.
If you have enough "safe funds" from which you can take your distributions for expenses available outside the balanced funds, the problem of having to sell stocks at a bad time is eliminated. (as long as the bad time is less than 5 years, but mine should be many years longer because I invest the fund's dividends into those safe funds in the tIRAs as per this thread, instead of reinvesting them). I have maintained and increased those "safe funds" since 2008. (by the way my investment balance has grown with only 23% stocks total since 2010 and taking out annually for expenses since then.)
The end # 2.
Last edited by Sheepdog on Tue Aug 14, 2018 12:12 am, edited 1 time in total.
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Re: RMD's: take distributions vs selling

Post by Earl Lemongrab » Tue Aug 14, 2018 12:10 am

Perhaps I just don't understand what you're saying. My perception was that due to distributions (regardless of the reason) you had to sell stocks at depressed prices. But it really seems that the reason is because you use balanced funds of some sort and you want to keep doing that, so you always sell a mix of stocks and bonds. So that's the reason you were selling stocks when they were down. Which was a choice you made, not a result of anything else. If you had wanted to sell only bonds you could have arranged that.
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Re: RMD's: take distributions vs selling

Post by Sheepdog » Tue Aug 14, 2018 12:42 am

Earl Lemongrab wrote:
Tue Aug 14, 2018 12:10 am
Perhaps I just don't understand what you're saying. My perception was that due to distributions (regardless of the reason) you had to sell stocks at depressed prices. But it really seems that the reason is because you use balanced funds of some sort and you want to keep doing that, so you always sell a mix of stocks and bonds. So that's the reason you were selling stocks when they were down. Which was a choice you made, not a result of anything else. If you had wanted to sell only bonds you could have arranged that.
No, I won't have to sell stock containing funds (balanced in my case) for expenses for quite a few years in bad times because I now have excess "safe funds". Note above. I have only 23% stocks and have since 2010. I don't think I sold any stock containing funds since then.
If you had wanted to sell only bonds you could have arranged that.
You won't let this go, will ya. I won't either then. It obviously is important to you to understand. I told you like it was. No, in 2008, I couldn't arrange selling bonds in those IRAs.. I didn't have any bond funds there to sell as I wrote, only balanced funds from which I was taking out for expenses. (I didn't touch the Roth IRAs which also contained balanced funds so that would not make any difference.) Outside those IRAs I did have some 6% CDs, less than $24K, which was not much, but because they were earning 6% and nothing else was, I wasn't about to sell them, but again that was minor.
Any way, after 2008 this problem ended as I gained those "safe funds" which was what I was trying to get through.
The end?
Last edited by Sheepdog on Tue Aug 14, 2018 12:56 am, edited 1 time in total.
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Re: RMD's: take distributions vs selling

Post by Dale_G » Tue Aug 14, 2018 12:55 am

Sheepdog, if your balanced funds were at a provider such as Vanguard, you could have exchanged part of the balanced fund proportionately into an equity fund and a bond fund, and then sold the bond fund to satisfy your RMD.

You would have sold bonds to satisfy the RMD, not depressed equities.

It would have required a little bit of effort on your part, but in no way were you forced to sell equities.

Dale
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Sheepdog
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Re: RMD's: take distributions vs selling

Post by Sheepdog » Tue Aug 14, 2018 12:59 am

Dale_G wrote:
Tue Aug 14, 2018 12:55 am
Sheepdog, if your balanced funds were at a provider such as Vanguard, you could have exchanged part of the balanced fund proportionately into an equity fund and a bond fund, and then sold the bond fund to satisfy your RMD.

You would have sold bonds to satisfy the RMD, not depressed equities.

It would have required a little bit of effort on your part, but in no way were you forced to sell equities.

Dale
Yeah, that looks reasonable, without thinking about it too hard. Congratulation. After the 10 years that withdrawal situation has been discussed off and on, you are the first one to come up with that possible remedy. Thanks for thinking.
It's not what you gather, but what you scatter which tells what kind of life you have lived---Helen Walton

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Earl Lemongrab
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Re: RMD's: take distributions vs selling

Post by Earl Lemongrab » Tue Aug 14, 2018 12:41 pm

Sheepdog wrote:
Tue Aug 14, 2018 12:42 am
You won't let this go, will ya. I won't either then. It obviously is important to you to understand. I told you like it was. No, in 2008, I couldn't arrange selling bonds in those IRAs.. I didn't have any bond funds there to sell as I wrote, only balanced funds from which I was taking out for expenses. (I didn't touch the Roth IRAs which also contained balanced funds so that would not make any difference.) Outside those IRAs I did have some 6% CDs, less than $24K, which was not much, but because they were earning 6% and nothing else was, I wasn't about to sell them, but again that was minor.
Any way, after 2008 this problem ended as I gained those "safe funds" which was what I was trying to get through.
The end?
You seemed obsessed with being able to "call the end". I'm not sure why. At any rate, the only reason you couldn't sell only bonds was because you decided that you would only have balanced funds. The way you would have sold only bonds would be to stop doing that. Like I said, it was YOUR decision to only have those funds. No one made you do that. You could have sold some of the target funds in excess of your needs and bought stock funds within the IRA.

So you weren't forced to sell stocks. You chose to sell them.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

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