Just turned 70½, so have to take my first RMD by year end (don't want to double up next year). Since it's a fixed $ amount, I'd love to take it at a high to sell the least # of shares, but I know that kind of timing is unpredictable. However, I wonder whether the capital gain distribution date is important to consider. They're both Vanguard IRA's ( VIMAX and VSEQX) which distribute in mid-Dec. Adding a little complication, I want to make QCD's from part of the RMD proceeds, which could make for a busy holiday season. Any thoughts?
Comments
I'm no expert on RMDs, I guess I can wait a bit to learn. However, I'm thinking maybe you include RMD as part of adjusting your asset allocation all through the year perhaps? This way you don't have to make decision in one shot and have regrets later. So perhaps every quarter when you adjust your allocation to bring it to par you take money out.
Whether for RMD or for any other reason, one always wants to buy low and sell high. So if, say, you want to pull $4K out of an account, you'd rather do it when that account is worth $100K (4% drawdown) rather than when the value has dropped to $80K (5% drawdown).
Of course that's the theory. The reality is no one knows when the account will hit the high point for the year. (Though since investments tend to rise more than fall, later in the year seems to work out better on average.)
The dividends don't matter because they don't affect the value of the account. Whether you've got 10,000 shares at $10/share, or 12,500 shares at $8/share (after a distribtion of 2500 shares), the total value is the same. Either way, the RMD is in dollars, not shares.
QCDs are a nice way to take part of an RMD without paying taxes on the withdrawal. Especially now that it's gotten much harder to itemize deductions. It's great you're thinking about this - both for your taxes and for whoever gets the contributions.