transferring stocks from IRA for the RMD
I have an IRA and a regular taxable account at a brokerage firm. For the 2021 RMD, I’d like to transfer stocks from my IRA to my regular account or a new account.
My first question is:
Will I have to pay taxes a second time when I sell these stocks in a few years?
My second question is:
Should I open a new account only for this purpose as I will have to transfer stocks every year. This way I will keep things separate and easy, specially if there is no double taxation.
Permalink Submitted by Alan - IRA critic on Thu, 2021-12-09 18:10
When you distribute in kind securities from a retirement plan, your cost basis in the taxable brokerage account is the value of the shares at the time of distribution. The holding period starts over in the brokerage account, so any gains in the brokerage account will be ST gains if you sell in the first year. There is NO double taxation. Note that you cannot exactly control the value upon distribution from the IRA, so if you want to hit your RMD amount on the nose, you will probably have to transfer roughly 96% of your RMD as shares then round off the rest of your RMD with a cash distribution a couple days later. There is no reason to open a new brokerge account if you already have one. FInally, many securities can be sold in the IRA and repurchased in the brokerage account with no commission, depending on who your broker is and what investments you are transferring.