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After several years of RMDs from my rollover IRA, I’ve run out of cash to cover the withdrawal. In 2025 there is enough cash to cover about half the required RMD.
So, where does the rest come from? Which fund(s) do I sell? Here are the funds and their percentage of the account balance.
NOTE about these funds. There is no rhyme or reason. A logical strategy does not exist. Some resulted from the transfer of the account. We don’t use the funds to live on. The RMD will mostly be given to charity and our children. Whatever is left reinvested.
FSPGX 48%. FIDELITY LARGE CAP GROWTH INDEX FUND
FTHRX 18%. FID INTERMEDIATE BOND FUND
FIVFX 11%. FIDELITY INTL CAP APPRECIATION FUND
FBALX 8%. FIDELITY BALANCED
FSMDX 6%. FIDELITY MID CAP INDEX FUND
LEGAX <6%. COLUMBIA LARGE CAP GROWTH CL A
VHYAX < 6%. VANGUARD HIGH DIV YLD IDX ADMIRAL SHS
Why don’t you take it in kind and pay the taxes on the RMD amount from other sources? I always take my RMD in kind. If you like the funds, this allows you to keep them without selling any shares.
Hi RQ, this is a great in-kind summary from Schwab, I found it helpful.
https://www.schwab.com/learn/story/taking-kind-distributions-from-your-ira
My observations. The portfolio listed gives about a 1.3% yield. If you are using automatic stock purchase I would consider suspending that to release cash for the RMD.. The portfolio stock type is about 46% Growth (this includes about 26% aggressive growth and 6% speculative growth). It is also about 99% North American companies. I arrived at this by running the portfolio through Morningstar’s X-Ray tool (a free version is available). One thing you could consider is upping your percent of dividend paying companies. You could then use the dividends to build cash to feed a portion of your RMD, reducing the quantity of equities you would need to sell each year. Others have mentioned building a cash cushion or doing an in-kind distribution. Overall the portfolio has an average 0.21% fee ratio, not all that bad (about $2,100 annual on $1 million), but higher than equivalent ETFs. Why give it away?
Would putting your dividends into a cash account like VMFXX inside your IRA annually make up for your RMD withdrawals?