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When in the year do you take your RMDs?

In the beginning of the year or the end? Are there any timing advantages?
If the goal is to empty the account to a taxable account to lower RMDs in the next year, then taking the RMD sooner in the year makes more sense. Taking the RMD later allows your portfolio to grow, and cause higher RMDs. Taking a RMD when the market is down, any time of year, would allow you to remove a larger percentage of your portfolio.

However, it matters what your investments are. If stocks, then timing of a particular stock is more important than the market timing. Now you have two strategies. Remove your high gainers, and lower your portfolio value, lowering your RMDs. or... Remove stocks that are down, BUT you think will recover. That way, you take out maybe $10,000 in stock A, that grows to $12,500. You reduced your portfolio by $10,000, but it grew outside your IRA. So, that is like reducing your portfolio by $12,500 if you had not removed it.

I agree with other posts that say to focus on your after-tax gains. You do not need to worry about RMDs if keeping the funds in longer gives you a better yield. Is your goal to just reduce the amount in your IRA to lower your RMDs because higher RMDs will bump you into higher Medicare bracket and higher tax bracket? That is where we are. So, we see higher FED and State taxes, AND higher Medicare if we do not lower our value and lower our RMDs. To us, lower yield is better than the higher tax rate.
I'm not understanding your strategy of taking RMDs at the end of the year. Aren't you presuming that the market will be higher in December, which may not necessarily be the case? What happens if the market was at its high in January, but then goes into a correction, or even hits bear territory in the 3rd or 4th quarter? In that scenario, you'd be withdrawing your RMD at the worst possible time. Wouldn't it make more sense to distribute the withdrawals evenly throughout the year, and simply accept the fact that none of us can predict where the market will be at any given moment?
Hi Cassie......sure, if you actually believe --- as I know some folks do --- that an investor can know absolutely nothing about future prices/returns, taking regular periodic withdrawals, quarterly, monthly, weekly? daily?, seems like a logical solution EXCEPT in an alternative scenario I (or anybody!) can make up, like....

Equities rally in January then crash for the next 10 months, only to recover and rally in Nov and Dec. Monthly withdrawals could be very very sub optimal in that scenario, which is as likely as any other.

Of course, folks who adhere to buy-and-hold strategies(?) DO believe they can know ONE thing about future prices: that they will be higher later. So waiting til December at least fits that thesis. I don't share that view and would kick myself if I'm not holding lots of cash (to RMD with) at the bottom of any serious market reversal/crash. (See...we even call it a "reversal" when it's NOT going up!)
I am an investor who actually believes I "can know absolutely nothing about future prices/returns". I have a lazy portfolio of 5 index ETFs (2 equity, 3 bond), so I'm pretty much a passive passenger on the market roller coaster.

But I agree that having a cash reserve to "RMD with" is key, and I should've clarified that that's what I had in mind. Figured I'd try to sell shares only during the upturns, so I'd have enough cash to satisfy the RMD by year-end. Of course this is all moot now that the SECURE Act has rescued me. I don't turn 70 1/2 until September, so I'm off the hook until 2022. I'll probably need to tap into the egg anyway, but at least I'll have some measure of control as to timing and amount. My wife is not as fortunate, since she took her first RMD last year. So I get to chide her for a couple of more years.

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