Money Market fund for dividends, capitol gains, etc??

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Sweetbriar
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Money Market fund for dividends, capitol gains, etc??

Post by Sweetbriar » Thu Nov 09, 2017 1:52 pm

Will be begin IRA RMD in Dec/2017 with Fidelity. Should I set up a Money Market account for my dividends, capitol gains, and interest or not?
Thanks

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mickeyd
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Re: Money Market fund for dividends, capitol gains, etc??

Post by mickeyd » Thu Nov 09, 2017 2:02 pm

There are a lot of ways to think about RMD action. I just continue to reinvest all of my IRA dividend distributions and take my RMD cash either once or twice a year, depending on the situation. As for if you should open a MMF or not, that's your call.
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

dbr
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Re: Money Market fund for dividends, capitol gains, etc??

Post by dbr » Thu Nov 09, 2017 5:44 pm

The most straightforward transaction is to just sell some selection of assets to fund the RMD, reinvesting any dividends, interest, and distributions as you go. While you are at it you can select the assets to sell so as to drive your asset allocation nearer to target.

Sweetbriar
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Re: Money Market fund for dividends, capitol gains, etc??

Post by Sweetbriar » Sat Nov 11, 2017 2:07 pm

Sweetbriar wrote:
Thu Nov 09, 2017 1:52 pm
Will be begin IRA RMD in Dec/2017 with Fidelity. Should I set up a Money Market account for my dividends, capitol gains, and interest or not?
Thanks
My question was initiated after reading this from Vanguard's info, Setting Up Your Retirement Withdrawls, "as you were building your savings, you probably used your earnings to buy more shares of your investments...that's compounding :D. But now that you're spending money from your accounts, consider having your earnings transferred to a money market rather than invested, at least in your taxable accounts".
(Which I don't have!)

It continues, "Here's why: you'll incur taxes on these gains when they are paid out. If you reinvest them and then turn around and withdraw them in a few months, you'll likely have to pay taxes on them again."

Your thoughts...

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mickeyd
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Re: Money Market fund for dividends, capitol gains, etc??

Post by mickeyd » Sat Nov 11, 2017 3:02 pm

It continues, "Here's why: you'll incur taxes on these gains when they are paid out. If you reinvest them and then turn around and withdraw them in a few months, you'll likely have to pay taxes on them again."
Sounds like marketing gibberish. Do what you need to do to get your $ where you need it to be.
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

dbr
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Re: Money Market fund for dividends, capitol gains, etc??

Post by dbr » Sat Nov 11, 2017 3:15 pm

Sweetbriar wrote:
Sat Nov 11, 2017 2:07 pm
Sweetbriar wrote:
Thu Nov 09, 2017 1:52 pm
Will be begin IRA RMD in Dec/2017 with Fidelity. Should I set up a Money Market account for my dividends, capitol gains, and interest or not?
Thanks
My question was initiated after reading this from Vanguard's info, Setting Up Your Retirement Withdrawls, "as you were building your savings, you probably used your earnings to buy more shares of your investments...that's compounding :D. But now that you're spending money from your accounts, consider having your earnings transferred to a money market rather than invested, at least in your taxable accounts".
(Which I don't have!)

It continues, "Here's why: you'll incur taxes on these gains when they are paid out. If you reinvest them and then turn around and withdraw them in a few months, you'll likely have to pay taxes on them again."

Your thoughts...
First thought is to note that tax issues don't apply in tax deferred accounts. This thread seemed to be talking about RMDs. Second thought is that it is true that you may pay some tax again when you sell to withdraw, but that might not be a lot if you are using Spec ID. "Pay taxes again" is a very imprecise and misleading statement.

Sweetbriar
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Joined: Sat Aug 23, 2014 4:36 pm

Re: Money Market fund for dividends, capitol gains, etc??

Post by Sweetbriar » Sat Nov 11, 2017 3:50 pm

I additionally will not need my RMD money for 3-5 years... after taxes approx. $32,000 withdrawn x once a year. Trying to decide what to do...conserving is a priority. Thoughts?

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mickeyd
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Re: Money Market fund for dividends, capitol gains, etc??

Post by mickeyd » Sat Nov 11, 2017 4:12 pm

Sweetbriar wrote:
Sat Nov 11, 2017 3:50 pm
I additionally will not need my RMD money for 3-5 years... after taxes approx. $32,000 withdrawn x once a year. Trying to decide what to do...conserving is a priority. Thoughts?
Since you will not need it in the short run, consider a CD for the appropriate term. Or, try online savings account, or consider a ST bond fund.
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

dbr
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Re: Money Market fund for dividends, capitol gains, etc??

Post by dbr » Sun Nov 12, 2017 9:27 am

Sweetbriar wrote:
Sat Nov 11, 2017 3:50 pm
I additionally will not need my RMD money for 3-5 years... after taxes approx. $32,000 withdrawn x once a year. Trying to decide what to do...conserving is a priority. Thoughts?
An RMD all by itself is not a withdrawal or an expenditure. Saving only that a tax cost is involved, an RMD is just a transfer from one of your accounts to another. You can put the RMD into whatever investments make overall sense to your allocation and asset location plan. The RMD is not an asset in isolation and would not be treated in some special way. Also, an RMD is not a large fraction of one's overall portfolio and shouldn't be a distortion to your plans.

mega317
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Re: Money Market fund for dividends, capitol gains, etc??

Post by mega317 » Mon Nov 13, 2017 6:13 pm

Sweetbriar wrote:
Sat Nov 11, 2017 2:07 pm
It continues, "Here's why: you'll incur taxes on these gains when they are paid out. If you reinvest them and then turn around and withdraw them in a few months, you'll likely have to pay taxes on them again."
Haha what nonsense. The only way you'd have more taxes to pay is if you had more gains. That's a good thing!

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