Limit order in an inherited IRA?

Submitted by Erika Courtois on Thu, 2022-06-30 20:24

Hi All,
I have an individual stock position in an inherited IRA. I’d like to use this for my 2022 RMD but what to sell it only if it reaches $x per share. IRA is with Fidelity. Can I do limit orders in an IRA? Thank you.

~Seattle Slew



Submitted by Alan - IRA critic on Fri, 2022-07-01 01:15

Yes, you can. If the shares fail to reach your stated limit order, you could still have the shares distributed from the IRA to meet your RMD. Your RMD does not have to be in cash. You could have the shares transferred into a taxable brokerage account. The share basis in the taxable brokerage would be it’s value at the time of distribution.



Submitted by Erika Courtois on Fri, 2022-07-01 19:40

Thank you for your feedback Alan, and for all you do on this forum.Actually, you bring up something I had not thought of before.  Needless to say, I have to drain this inherited IRA.  For me, by 2028.  It’s holding mostly Contrafund, a Fidelity mutual fund.  Can I just move chunks of this fund to a taxable account — without selling them, like with the stock position — to meet the fed’s required drainage deadline?



Submitted by Alan - IRA critic on Fri, 2022-07-01 22:38

  • Yes, you can request an “in kind” distribution, which is a transfer of actual shares to a taxable brokerage. I don’t know if partial shares can be transferred or not, but if not you will have to overshoot your RMD by a small amount based on the NAV of the Contrafund shares. 
  • Are you sure you have to drain the account by 2028?  Are you using the decedent’s single life expectancy or your own?


Submitted by David Mertz on Sun, 2022-07-03 01:51

  • I don’t think that there is any problem distributing partial mutual fund shares at Fidelity, but I think you must specify the in-kind distribution by number of shares and not by a dollar value, so you’ll probably under or overshoot the desired dollar value of the distribution by a bit, if that’s a concern.
  • Although the funds would be out of the market for a bit, there isn’t much difference between distributing the shares in-kind and instead selling the shares, distributing the desired dollar amount and repurchasing the shares outside the IRA (and using any dollar amount left in the IRA to repurchase shares inside the IRA) other than possible concerns about round-trip limitations.  The basis and the holding period of the shares outside the ECU would be essentially the same either way.


Submitted by Erika Courtois on Tue, 2022-07-05 20:23

Thank you both. Yes, I know I am on the hook for draining this account.  I inherited the IRA(s) from my mother and I am her adult daughter.  But you did give me a good option – the fund and stock IRA’s “in kind” distribution rather than cashing them out.  Because I would be transferring them at a “loss” my taxes should be lower than cashing them out and adding to my income.  Am I on the right track here:  By doing the transfer I get to avoid getting bumped into a higher income tax bracket for 2022?  Thank you again wonderful people.



Submitted by David Mertz on Tue, 2022-07-05 20:40

You misunderstand.  There is no taxable difference between distributing the shares in-kind and distributing the cash proceeds after selling the shares inside the IRA.  The Form 1099-R will show the same taxable amount either way.  Distributions from an IRA, whether in-kind or as cash, are taxed as ordinary income.  There is no recognizable loss.



Submitted by Dan Zaehring on Tue, 2022-07-05 21:19

Maybe there is more details than you mentioned, but if the target end date is 2028, then I make an assumption that you inherited in 2018.  And if that is the case, then that was pre-Secure Act and is not subject to the 10 year rule.



Submitted by Erika Courtois on Wed, 2022-07-06 00:26

Thank you both!  Salishseas, my mum died in 2020.  I fall under the Secure Act; I did not withdraw anything in 2020 (COVID hoo-ha and RMD waiver which probably did not apply to me in any case bc waiver had nothing to do with the Secure Act 10 yr timeframe), and only a little bit in 2021.  Because of these two “lost years” I feel under pressure to start a more drastic averaged withdrawal schedule.   DMx, Thank you for your feedback.  I understand I’ll need to pay taxes.  I think I got muddled when I did not recognize the “distribution” as income, hence, subject to income taxes i.e. distribution  is  income on my 2022 tax return.  Thank you both again!



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