Talk of The Villages Florida - Rentals, Entertainment & More
Talk of The Villages Florida - Rentals, Entertainment & More
#31
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Actually, they are. For example, if your total pretax deposits total $100K, and your account drops in value to $80K by the time you retire, you would only owe tax on the $80K that you withdraw.
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#32
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retired guy 123, I already knew all that stuff about ordinary income tax on the distribution and about the joy of cap gains inside an IRA. That's what makes capturing a gain inside an IRA much sweeter. But I must be looking at the OP's question in a different way than you are........ I took it from the angle of there being a long held, highly appreciated, dividend-belching behemoth inside the IRA -- a stock that has been a dependable source of income -- possibly for decades. Those who own stocks like this often hold them forever and would miss them if they were gone. Having to sell inside the IRA and rebuying after would not offer any consolation because the buyback probably would mean a lot fewer shares. Is an in-kind transfer to a regular account possible? I do not know. All I know for sure is the distribution has to come out of the IRA and the cash for the ordinary income tax has to come from somewhere. Back to what I said about cost basis -- if such an in-kind transfer is possible -- in that case, surely that in-kind transferred stock would come in lugging its cost basis. I cannot imagine the IRS allowing a do-over on that one. If the holder plans on probably never selling the stock, then it should never make any difference. (The tax law -- for a very long time -- has allowed a new cost basis on inherited stock, but that's the only do-over on cost basis, as far as I know. It's been in the crosshairs, off and on, but so far it's survived.) If it is found that there is such a thing as an in-kind transfer, as long as there is outside cash on the side to pay the RMD, then the decision as to "when" becomes a factor. If the holder thinks the share price is going to take a big hit but wants to continue to hold -- probably due to having been through ups and downs before and still trusting the stock -- then to do the transfer at what "feels" like the high would mean relinquishing fewer shares to the taxable account. OP, your question brought back memories of my favorite accountant. He is no longer with us, but I remember he would call this kind of thing, "trying to break your money out of its prison." Boomer Last edited by Boomer; 05-06-2022 at 06:10 PM. |
#33
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If you have a Roth, or you have a traditional IRA that was fully or partially funded with after tax money, it can get complicated. |
#34
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It's been fun talkin' witcha about this, rg123. This thread has made me "curiouser and curiouser" -- like Alice said in Wonderland.
I think maybe we have been talking about apples and oranges mostly, but that's OK, it sent me on a search -- which I should have done in the first place -- but that's OK, too. Where's the fun in that. Can't let the internet do all our thinking for us. (Btw, the link I am providing is to a legitimate source. I vet the internet.) I like learning about this stuff, and I always let it be known that I was not in the money business. I just found an article that lays it all out. It clearly says that an in-kind transfer resets the basis. I am pleasantly surprised. I might be seeing possibilities in a reset basis -- only after talking to a tax professional, of course. And I would never have even thought about it had it not been for these TOTV screen-side chats. Read on. Here it is: How to Take In-Kind Distributions from Your Tradition... - Ticker Tape Boomer Last edited by Boomer; 05-06-2022 at 09:14 PM. Reason: typos |
#35
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“You still have to pay taxes when you use an in-kind IRA distribution,” said Luber. “The IRS wants the money. That’s the point of RMDs in the first place.” I'll need to think about it, but why not just repurchase the same stock and start a new basis? |
#36
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This is why I am happy to pay for the services of our CPA.
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#37
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Boomer |
#38
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Now, Stu, please do not lecture me. I have said repeatedly around here that I never do anything taxing (chuckle) without our CPA.
“I know a little bit about a lot of things, but not a whole lot about anything,” said Boomer, in a self-effacing manner. (I really do say that in my real life. ) Boomer |
#39
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#40
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Having read this thread and the link about in-kind transfers, I am at a loss to see the difference between doing and in-kind transfer out of an RMD, which is fully taxable at market value or selling and immediately repurchasing in a taxable account except for a possible price change during the few days involved. The only possible other reason, which seems not to be addressed is that ownership date may or may not reset in an in-kind transaction.
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#41
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Also thank the poster for the link regarding in kind transfer. A lot of great talent on these posts!! |
#42
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I have not been in the position to have to sell stock to pay taxes, but this in-kind transfer thing is really good to know about in case we decide to put ourselves in that position. The other thing to watch for with the RMD is IRMAA (Income Related Monthly Adjusted Amount). Medicare premiums for B and D are based on a sliding scale, based on AGI, and IRMAA can sneak up on you if you don’t know it’s there. A good year in the market resulting in a big RMD can throw you into bigger Medicare premiums that show up two years later. The QCD can help if the taxpayer is charitably inclined. It would be really frustrating to cross over the line by just a little and get hit with a bigger premium. (Surprise!) IRMAA is something to be aware of and can take some tax-planning. And please don’t get me started on conversion to Roth after the RMD is paid. We knew we would have to pay the piper someday, but it really can feel like “trying to break your money out of its prison,” like my accountant said. There can be so many moving parts to the plan and it has to go just right. Boomer |
#43
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#44
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New IRS interpretation will screw your heirs. Annual distribution for them is required. They likely will pay more tax if working than the benefit you received.
The new IRS 10-year RMD rule isn't what we thought it was Confusion about 2022 required minimum distributions - InvestmentNews Early planning on qualified charitable distributions can mean bigger tax savings - InvestmentNews Last edited by Babubhat; 05-07-2022 at 04:08 PM. |
#45
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Closed Thread |
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