Required Minimum Distribution - Where do I put it?

[zcaveman]

I am 70 and1/2 and am required to take the Required Minimum Distribution (RMD). My question is what do I do with that money? According to the memos that I received I cannot put it back into the funds. I do not need the money. The interest rate is dismal.

Where is a good place to put the money?

Z

[Kahuna32162]

I use mine to fund tax free mun's that pay a monthly dividend that adds to the income stream.

[iaudit]

You can not put it back into a regular IRA. You can put it back into the same fund but not within a regular IRA. You also might be able to put it into a Roth IRA.

[rjm1cc]

I would look at dividend paying ETF funds.

[justjim]

With ours we purchased At&T with half and tax free bonds with the other half. I can't see putting it in a bank or Credit Union account at the present time.

[KayakerNC]

One word: plastics.
https://encrypted-tbn2.gstatic.com/images?q=tbn:ANd9GcRPVrxWLfFugNkmwMHHIq9KZiGN9b4nO dPobwfQCCJnQo1fg0w4jg

[zonerboy]

If you really don't need the money, why not put it into a reputable charity and take a tax deduction. Or gift it to children or grand kids.

[njbchbum]

The way things are going I'll be putting mine into a mattress!

[gomoho]

If you really don't need the money, why not put it into a reputable charity and take a tax deduction. Or gift it to children or grand kids.

I like the way you think - there are so many that DO need the money.

[Laurie2]

With ours we purchased At&T with half and tax free bonds with the other half. I can't see putting it in a bank or Credit Union account at the present time.

I like T, too.

For those who are comfortable with owning individual stocks, T might deserve a look. The annual dividend is $1.84 per share which is a current 5.2% yield. T has a long history of not only paying its dividend but increasing it. On Friday T closed a couple of dollars off its 52 week high. There are investors who like to pick up conservative stocks when they are off their year's high.

Most of the sleep-at-night individual stocks do not pay a dividend as high as T, but there are those that pay 3 or 4-ish %. I do not think we will ever see decent CD rates again.

If you invest in individual stocks in a taxable account, make sure you understand how your income tax will be affected. The taxation rate on dividends can be pretty friendly. If you use an online brokerage, they now keep track of your purchase price (cost basis) for you so if you sell to take a gain, or maybe a loss, it will be reported in your account statement for tax purposes.

There are a few other things to be aware of like what ex-dividend means. But overall, it really is not that hard, and it can be fun to choose stocks for yourself. You could dollar-cost-average the money into the stocks until you get used to how you feel about being an individual investor. Some people find it boring or just cannot stand to do it. There are those who are happier with a mutual fund or ETF so somebody else can make the decisions on what and when to buy and sell. There are those who are not comfortable with the stock market in any way and can tolerate only keeping it in a bank account. Don't ever get talked into doing something with your money that you just don't feel right about.

The main thing to know is to know yourself, your risk tolerance, and to understand what you are buying. (Also, never take advice from strangers on the internet.) :wave:

I am including a link here to a list of stocks that have paid and increased their dividends for 25 years or more. Sometimes these stocks are called Dividend Aristocrats. This list might offer a start to learning more about individual stocks that you could feel comfortable owning through their ups and downs because that dividend pays you to wait -- and could even give you a raise while you are waiting.

25-Year Dividend Growers Stock List - Dividend.com (http://www.dividend.com/dividend-stocks/25-year-dividend-increasing-stocks.php)

[TomW]

Several of my friends are funding scholarships for all sorts of things with money they don't need at this time.

[pbkmaine]

Vanguard index funds or ETFs.

[John_W]

We have an Oct. 1st direct deposit of the IRA funds into our checking to pay our property taxes and bond. The bill should be coming sometime this month.

[l2ridehd]

If you don't need it right now, than just place it in some low cost index funds that match the asset allocation you have selected. At 70 you should have an AA of 30/70 or 40/60 stocks/bonds. So just buy Vanguard total stock market with 40% and Vanguard total bond market with 60% and each year add those RMD to this already taxed fund account. Very little to no tax impact and the money is easy to get should you need it.

[borjo]

I too use Vanguard Funds but I have a money market fund with them and that's where I put my IRA money. I use the money market then to pay for my LTC and other large purchases. By putting my quarterly RMD in there, it keeps it from going to zero and is another little spending account for me.

[TomW]

Assuming you were happily invested in the account prior to RMD, you can just create a regular brokerage account and reinvest the funds in the same assets. You lose only the tax advantage. If you don't want to invest in the same assets, you may want to review your tax advantaged investments.

[Shimpy]

I like T, too.

25-Year Dividend Growers Stock List - Dividend.com[/url]

I also like Dividend.com, and use their recommended stock list. I've been with them for about 3 years now and have never had a bad investment.

[TNLAKEPANDA]

I say spend it and have fun. The old saying you can't take it with you. You can gift I believe $10k per year per person if you don't want to spend it. It is better to gift the money because it avoids lots of taxes on both ends.

[JGVillages]

Converted my IRA to a Roth IRA as I do not need the funds now. I am fortunate enough to have been able to pay the tax consequence due with non IRA funds so now the entire IRA (now ROTH) will accumulate tax free. There are no requirements to take annual withdrawls and if needed you can take as little or as much when you want. I was able to make up my conversion tax consequence in a little over 2 years. From now on it is tax free heaven!

[Laurie2]

Converted my IRA to a Roth IRA as I do not need the funds now. I am fortunate enough to have been able to pay the tax consequence due with non IRA funds so now the entire IRA (now ROTH) will accumulate tax free. There are no requirements to take annual withdrawls and if needed you can take as little or as much when you want. I was able to make up my conversion tax consequence in a little over 2 years. From now on it is tax free heaven!


You bring up a really good point about being prepared with cash to pay taxes without dipping into your IRA investments.

The ins-and-outs (or should I say outs-and-ins) of doing an in-kind transfer of assets from a traditional IRA into a Roth IRA might be something worth learning about, especially for those who are longtime buy-and-hold investors within their traditional IRA's.

[billethkid]

we use ours to pay tax bills and annual insurance premiums which we have over the years managed all to come due the month after the distribution.

What ever is left is used to fund our bi annual cruise fixes!!!