Since the vast amount of dividends we receive fall into the last three weeks of the financial year, we take care of our respective RMD's on the first business day of the new year with those cash dividends from our TIRA's (we reinvest all dividends for our respective Roth IRA's as received during the year). We have followed this plan for the last three years we've been subject to RMD's.
The RMD's, taken from our respective Fido & VG accounts are used for the following:
1. Fulfill the requirement for the year of required RMD's.
2. Pay taxes on the RMD withdrawals.
3. Pay taxes on the remaining of our retirement income; SS, SPIA, pensions. Since these payments are static throughout the year, it's easy to forecast what our gross income will be, along with forecast FIT (no state/local income tax in our case). Of course, we still have to add interest from our respective cash interest/dividends, but that's only a few $K that will affect our actual gross income for the current year.
4. Any leftover cash that remains after our RMD's are taken is reinvested across our universe of TIRA holdings, leaving $1.00 in our respective core holdings.
The remaining withdrawal is basically split between paying for enhanced travel (e.g. business/first class) for trips we've already scheduled for the year with the remainder going into short term savings for the "what if's" in life. We don't reinvest the excess since we've lucky to have substantial retirement benefits/income to cover all but a small amount of our budget, along with our respective retirement funds.
In the last three years, our RMD's have accounted for 3.1, 3.1, 3.2% of our joint retirement account withdrawals (much less if you include our funds in our respective bank accounts). We probably hold too much cash in our bank accounts, but that's a result of both being brought up poor, along with the financial challenges we faced during our first decade of marriage (celebrated our 50th, last year).
We don't try to maximize our returns by waiting until year end to satisfy our RMD's. Being a bit conservative, we would rather satisfy a financial "obligation" (which the RMD process is) rather than hope that market returns cover (at least partially) our RMD's at year end.
In the three years we've been subject to RMD's, the market has been up two years, down one. That's a 33% market down factor we're not willing to live with, especially since we're fortunate to have our remaining retirement well covered from a financial sense. We don't have to squeeze every last possible penny from our financial resources to live the life we wish.
As far as the QCD comments? We don't and will not contribute via that option. Our remainder estate will be used to finance the needs of our disabled adult "child" after we're gone. As they say, "charity begins at home"; that's our situation.
I also want to get this financial exercise out of the way for the year, for the benefit of my spouse should I "check out" before year end. She is well aware of our financials, but does not do transactions (such as RMD's) on an ongoing basis. This is just one of those "what if" items on our list that she doesn't have to worry about should I leave the party early
. After I'm gone, she can have an accountant take care of the process under any rules that they may agree on.