Monthly RMD from VG

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Indymac1941
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Monthly RMD from VG

Post by Indymac1941 » Wed Jan 09, 2019 7:24 pm

Have just moved to all index investing and am curious as to whether my RMD for 2019 should come from the 60% bond portion, from the 40% equity side, or should it balanced as well? I am a newbie to the forum and am open to suggestions!

sport
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Re: Monthly RMD from VG

Post by sport » Wed Jan 09, 2019 7:37 pm

Welcome to the forum.
My choice would be to make a decision each month, taking the withdrawal from the fund which is over my target allocation. For example, if the allocation becomes 39/61, take it from the bond fund; if it becomes 41/59, take it from stocks. This also lets you make QCD donations if you are older than 70.5. Setting up automatic monthly withdrawals is convenient, but it restricts what you can do. The calculation outlined above would only take a minute with a calculator.

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friar1610
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Re: Monthly RMD from VG

Post by friar1610 » Wed Jan 09, 2019 8:20 pm

sport wrote:
Wed Jan 09, 2019 7:37 pm
Welcome to the forum.
My choice would be to make a decision each month, taking the withdrawal from the fund which is over my target allocation. For example, if the allocation becomes 39/61, take it from the bond fund; if it becomes 41/59, take it from stocks. This also lets you make QCD donations if you are older than 70.5. Setting up automatic monthly withdrawals is convenient, but it restricts what you can do. The calculation outlined above would only take a minute with a calculator.
While I agree that it may restrict you, if you set up automatic monthly withdrawals and have them taken out proportionally, it will likely balance out over time. Just be aware that if you do set up auto monthly withdrawals and then you take a QCD, they will terminate the auto monthly withdrawals from that point on. But you could take automatic monthly withdrawals for, say, 9 months, do a QCD and then take the remainder of the year's RMD out manually.
Friar1610

Dandy
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Re: Monthly RMD from VG

Post by Dandy » Thu Jan 10, 2019 8:43 am

I would take the RMD proportionately. No need to fuss each month on where will I take my RMD from. Not suggesting set it and forget it but set it and keep an eye on it to make sure you stay close to your target allocation. If/when you find your allocation is getting out of hand -- then make a change.

Topic Author
Indymac1941
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Re: Monthly RMD from VG

Post by Indymac1941 » Thu Jan 10, 2019 11:29 am

Thank you for your prompt responses. I think I will go with the idea of making a monthly decision. Will not be that difficult to process and calculate on a monthly basis. Thanks!

rotorhead
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Re: Monthly RMD from VG

Post by rotorhead » Thu Jan 10, 2019 11:48 am

Indymac1941, there was a discussion thread on this subject last year.

Here is link to my response at the time.viewtopic.php?f=1&t=256848#p4076168. If you review the entire thread, you will see a variety of opinions. As Taylor is fond of saying, there are many roads to Dublin.

I'm in my 8th year of RMD now, and still find this method works just fine for us.

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Indymac1941
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Re: Monthly RMD from VG

Post by Indymac1941 » Thu Jan 10, 2019 12:42 pm

Rotorhead, will check it out. Thanks!

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ruralavalon
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Re: Monthly RMD from VG

Post by ruralavalon » Thu Jan 10, 2019 12:57 pm

Indymac1941 wrote:
Wed Jan 09, 2019 7:24 pm
Have just moved to all index investing and am curious as to whether my RMD for 2019 should come from the 60% bond portion, from the 40% equity side, or should it balanced as well? I am a newbie to the forum and am open to suggestions!
I am 73 years old, in the ninth year of retirement, and in the third year of Required Minimum Distributions. Our asset allocation is 50/50.

We take Required Minimum Distributions monthly, and proportionally from each fund in my rollover IRA.

My rollover IRA is about 80% of our portfolio, and contains bonds and both domestic and international stocks. The rest of the portfolio is in a joint taxable account, and two Roth IRAs. Taking proportionally from each fund in my rollover IRA tends to keep our asset allocation on target without any action by me.

I place a high value on simplicity and convenience. This is just personal preference.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Big Dog
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Re: Monthly RMD from VG

Post by Big Dog » Thu Jan 10, 2019 12:59 pm

For example, if the allocation becomes 39/61, take it from the bond fund; if it becomes 41/59, take it from stocks.
That's way too much work, even for an OCD like me. The market swings quite a bit daily. If you need the money to live on, I'd just have Vanguard take it proportionately and automatically, and then rebalance once a year if the allocation target is out of whack. If you don't need it to live on, just take the RMD once per year in December.

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mickeyd
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Re: Monthly RMD from VG

Post by mickeyd » Thu Jan 10, 2019 2:50 pm

Indymac1941 wrote:
Wed Jan 09, 2019 7:24 pm
Have just moved to all index investing and am curious as to whether my RMD for 2019 should come from the 60% bond portion, from the 40% equity side, or should it balanced as well? I am a newbie to the forum and am open to suggestions!
Do you have an Investment Policy Statement (IPS)? What does it say about how to take RMD distributions? Have you considered taking RMD annually or semi-annually rather than monthly? You could use RMD to rebalance your 40/60 AA.

You have many options.
Part-Owner of Texas | | “The CMH-the Cost Matters Hypothesis -is all that is needed to explain why indexing must and will work… Yes, it is that simple.” John C. Bogle

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midareff
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Re: Monthly RMD from VG

Post by midareff » Thu Jan 10, 2019 2:58 pm

Indymac1941 wrote:
Wed Jan 09, 2019 7:24 pm
Have just moved to all index investing and am curious as to whether my RMD for 2019 should come from the 60% bond portion, from the 40% equity side, or should it balanced as well? I am a newbie to the forum and am open to suggestions!
I started my RMD in January 2018 so this is year two for me. I maintain a relatively equal equity bond ratio in taxable and IRA portfolios of (roughly) 44% equities and the balance (IRA) in bonds and the taxable side bonds and CDs. On the IRA side I maintain about 4 years of RMD in the ST Corp Index and draw monthly. I revisit allocations when I hear the words "New S&P500 record or twice yearly, generally doing nothing except on an annual basis. I don't want to make decisions monthly, I'm retired and we were just gone for three weeks on a cruise ship. Everything is on auto-pilot from mortgage to credit cards. I could go away for a couple of years and only need an annual review. I like it that way.

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