Required Minimum Distributions and IRAs: Today’s Slott Report Mailbag

Thursday, December 19, 2024

By Andy Ives, CFP®, AIF®
IRA Analyst

QUESTION:

If a client opens an IRA at age 75 and makes a contribution this year, this account would not have a required minimum distribution (RMD) for 2024, correct? Since the IRA did not exist last year, there is no 12/31/23 balance.

ANSWER:

You are correct, there would be no RMD in the scenario you outlined. RMDs are calculated using the prior year-end balance. With no 2023 year-end balance, there is no RMD to calculate. Just be sure the person has earned income and is eligible to make an IRA contribution.

QUESTION:

Can you distribute stock in-kind from an IRA account to a non-IRA brokerage account to satisfy an RMD? 

Thank you, 

Jessica

ANSWER:

Jessica,

Yes, an in-kind distribution of stock can be used to satisfy an RMD. The value of the shares on the date of distribution is used when determining the amount of the withdrawal, so be sure to distribute enough shares to cover the RMD.

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