IRA Distributions
A client, age 60, just retired and wants to start taking distributions of about $ 60,000.00 from his IRA that has a current value of
$ 1,250,000.00. As oppose to just taking a monthly income stream of $ 5,000.00 from the overall portfolio, he wants dividends & Capital Gains paid out first. I there a benefit to his thinking that I am not aware of?
Permalink Submitted by Alan - IRA critic on Mon, 2019-02-25 23:54
No benefit. All IRA distributions are taxed as ordinary income, and client can take distributions from any investment in the account. If dividends and cap gains are not being reinvested, then they are paid into a mm fund as cash and client can then withdraw from the mm fund. Or if he wants the cash to accumulate, he can sell any investment in the IRA and use those proceeds for the distributions.
Permalink Submitted by David Mertz on Tue, 2019-02-26 00:55
The only thing I can think of where it might be of benefit to do it the way the client suggests is that it might avoid some transaction expenses or might avoid some back-end load on the sale of class C mutual funds if the dividends and capital gains are not reinvested. But that seems to be a pretty obscure possibility.