Direct transfer of funds from Inherited IRA to non-retirement account, both at Vanguard

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meercat8
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Joined: Tue Apr 02, 2019 5:29 pm

Direct transfer of funds from Inherited IRA to non-retirement account, both at Vanguard

Post by meercat8 »

Has anyone taken their RMD from a Vanguard account and put it directly into a taxable account at Vanguard, and why does it seem you have to do this in shares or a percentage but cannot do this in dollar amounts?
I am trying to take my RMD from my inherited IRA and move it to our non-retirement account, all on the same day. Before, when this account was not a brokerage account, I could sell from a fund and buy that fund in our taxable account or buy a different fund. It seems I have to sell in shares or a % but not in dollars now.
Does anyone know if I can sell one fund in an Inherited IRA and buy that same fund in a taxable account, and if I have to put it in number of shares or a %? Is there a day’s delay where you can’t do this directly?
It would be very helpful to understand what I can and cannot do.
Thanks!
Last edited by meercat8 on Wed Oct 30, 2024 11:45 am, edited 1 time in total.
Silk McCue
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Re: Moving funds from Inherited IRA to non-retirement account, both at Vanguard

Post by Silk McCue »

You must sell your desired fund so that the proceeds go into the settlement fund. Once settled you can transfer it your taxable brokerage account or to a connected bank account.

Cheers.
Topic Author
meercat8
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Re: Moving funds from Inherited IRA to non-retirement account, both at Vanguard

Post by meercat8 »

Once it is in the settlement fund, is it still in the IRA, and has the RMD been taken and satisfied at that point, or not yet?
lereh
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Re: Moving funds from Inherited IRA to non-retirement account, both at Vanguard

Post by lereh »

not yet
Silk McCue
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Re: Moving funds from Inherited IRA to non-retirement account, both at Vanguard

Post by Silk McCue »

meercat8 wrote: Tue Oct 29, 2024 4:37 pm Once it is in the settlement fund, is it still in the IRA, and has the RMD been taken and satisfied at that point, or not yet?
No the RMD is not met until the funds leave the IRA to your taxable brokerage or some other non-retirement account.

Edited to correct failure to proof read carefully. :)


Cheers
Last edited by Silk McCue on Tue Oct 29, 2024 5:31 pm, edited 1 time in total.
NancyABQ
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Re: Moving funds from Inherited IRA to non-retirement account, both at Vanguard

Post by NancyABQ »

Silk McCue wrote: Tue Oct 29, 2024 4:58 pm
meercat8 wrote: Tue Oct 29, 2024 4:37 pm Once it is in the settlement fund, is it still in the IRA, and has the RMD been taken and satisfied at that point, or not yet?
No the RMD is not met until the funds leave the IRA to your taxable brokerage or some other retirement account.

Cheers
I think you meant "some other NON-retirement account."
Topic Author
meercat8
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Re: Moving funds from Inherited IRA to non-retirement account, both at Vanguard

Post by meercat8 »

It did look like I could sell shares of my Inherited IRA and buy into a fund in my taxable account, and skip the settlement fund altogether. In fact I tried it with one share of the Total Bund fund, so $9.61 or so, and the transaction went through. Anyone know if this is a legitimate way to take an RMD?
Silk McCue
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Re: Moving funds from Inherited IRA to non-retirement account, both at Vanguard

Post by Silk McCue »

NancyABQ wrote: Tue Oct 29, 2024 5:08 pm I think you meant "some other NON-retirement account."
I did. Thanks I’ve fixed it.

Cheers
cadreamer2015
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Re: Moving funds from Inherited IRA to non-retirement account, both at Vanguard

Post by cadreamer2015 »

Anyone know if this is a legitimate way to take an RMD?
I don't see any reason this would not be legitimate.
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Alan S.
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Re: Moving funds from Inherited IRA to non-retirement account, both at Vanguard

Post by Alan S. »

meercat8 wrote: Tue Oct 29, 2024 5:14 pm It did look like I could sell shares of my Inherited IRA and buy into a fund in my taxable account, and skip the settlement fund altogether. In fact I tried it with one share of the Total Bund fund, so $9.61 or so, and the transaction went through. Anyone know if this is a legitimate way to take an RMD?
Any distribution will be applied automatically to the RMD.
A holding in your inherited IRA could be transferred directly to your taxable brokerage account, and your cost basis in the brokerage account will be the value on the date of transfer. The holding period would start anew.

Same would apply to a distribution (RMD or not) in your own IRA. As long as the broker of your taxable account can hold a specific security, there is no need to sell it and transfer cash. That said, doing an in kind distribution does not allow you to pinpoint the exact value of the holding at the time of transfer, and that could result in your falling slightly short of your RMD figure, or you could exceed the RMD by a slight amount.
Topic Author
meercat8
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Re: Direct transfer of funds from Inherited IRA to non-retirement account, both at Vanguard

Post by meercat8 »

I am sorry to say it, but I am still confused as to whether I can sell funds in my IRA and buy them in taxable with the same trade date and if that has to be in shares or a percentage, or if I can do it in dollars.
littlerfish
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Re: Direct transfer of funds from Inherited IRA to non-retirement account, both at Vanguard

Post by littlerfish »

meercat8 wrote: Wed Oct 30, 2024 12:24 pm I am sorry to say it, but I am still confused as to whether I can sell funds in my IRA and buy them in taxable with the same trade date and if that has to be in shares or a percentage, or if I can do it in dollars.
How complicated do you want your answer, and your life, to be?

If you sell shares, whether by dollar amount or by share count, the proceeds go into the settlement account in your iIRA, and are not part of a withdrawal. If you then withdraw funds from that settlement account, you can move those funds wherever you want, and that withdrawal will count as part of an RMD, or all of it, if it's large enough. An RMD is simply an amount that has to be withdrawn from the IRA, not a process.

As to the specifics of trade date and/or dollars versus share count, why not call Vanguard and find out?
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retiredjg
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Re: Direct transfer of funds from Inherited IRA to non-retirement account, both at Vanguard

Post by retiredjg »

meercat8 wrote: Wed Oct 30, 2024 12:24 pm I am sorry to say it, but I am still confused as to whether I can sell funds in my IRA and buy them in taxable with the same trade date and if that has to be in shares or a percentage, or if I can do it in dollars.
The way I remember it...if you sell a mutual fund in your IRA and buy a mutual fund in taxable, the price per share when you sell is unknown until the end of the day when the transaction takes place. So you can only sell by shares, not dollar amounts. That means you have to estimate the number of shares to reach your RMD and you may sell a few extra shares or end up a little short and need to do more RMD.

But, if you sell a mutual fund in your IRA and buy the money market fund in your IRA settlement account, then you can choose to sell by dollar amount and hit your RMD right on the penny. Trouble is, this takes a few days and a few visits for the money to go from mutual fund to settlement account in the IRA to settlement account in IRA to mutual fund in taxable. I found it ridiculous, but that's the way it works on the brokerage platform at Vanguard.

I don't use ETFs - they might work differently since they sell during market hours, not after the market has closed.
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sycamore
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Re: Direct transfer of funds from Inherited IRA to non-retirement account, both at Vanguard

Post by sycamore »

meercat8 wrote: Tue Oct 29, 2024 4:22 pm ...
It would be very helpful to understand what I can and cannot do.
One option to consider is an "in-kind" transfer from the IRA to the non-retirement account. There's no selling or buying per se, but it does count as a withdrawal (for RMD purposes or otherwise).

There are some factors to consider. Of course you would first ask whether you want to keep the same asset that's in the IRA. And whether you want to withhold taxes, and I'm not sure if you can do that with an in-kind transfer.

See these threads for more info:
viewtopic.php?t=421093
viewtopic.php?t=390919
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