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I glossed over the Roth side, yes...if one has an RMD requirement that is already painful from the tax side that one doesn't really need for current income, then even if it's not taxable, there's not much incentive to pull out from the Roth even if can without penalty.
Hence, it doesn't rank very high on my radar but if one is in different circumstances, yes, it could be helpful.
Have you ever verified that you made the correct moves? Ever tracked where you would have been if you had followed the advice to stay in?
Perhaps you did time it correctly or perhaps you just assume that you did. Only you can determine that. Well, your advisor probably could too, assuming he knows what moves you made and when.
I know you aren't talking about hard core market timing or panic moves, but missing even a few of the market's best days can be detrimental. This article deals more with the standard definition of market timing, so feel free to disregard most of the text and just review the "How much exactly?" section.
...and not just for RMD's.
Sure, you can write the check, but you better have cash in your IRA or the ability to raise cash on your own. Some firms allow client trading in IRA's, some don't.
The main drawback is the inability to control when the cash is withdrawn. The distribution doesn't happen until the "personal" check is deposited by the charity. If the custodian issues the check, the distribution occurs on the day the check is issued.
Worst case is you decide to do a QCD as your RMD late in the year and the charity holds your check until January. Technically you would be on the hook for a IRS penalty of 50% of the RMD because you never really took your RMD for the previous year. You could probably get out of it, but it would take some work. I'm just saying that letting the custodian issue the check eliminates that issue.
Thus my use of the word "may". ;-)
Also works for those who turn 70 1/2 after January 1, 2020. The SECURE Act left the QCD age at 70 1/2 when it increased the RMD age to 72.
Best. Advice. Ever.
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Well, if you are one who doesn't keep track of and ensure the cash is where you want it, then yes, Virginia, this option is probably not for you...
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Find a better-managed charity to which to donate and/or don't wait until the last minute...
Yes, I pulled the plug myself after watching $70K disappear over an 8 month period. And it stayed down pretty much for several years after that.
When I decided to get back in I went with a new money manager and of all people he said that I had timed the market well as far as getting back in goes.
Last time around the big 3 indexes were still down compared to where I am now as apposed to before it crashed last year. Basically when the market came back to where it was last year I was better off.
Not an assumption. I track the major indexes too.
I'm certain that I indeed did not make the perfect moves but better than doing nothing.
My investment in the market is pretty much emergency money and or what I plan to pass on to my son. I do not want to put myself in the position of being at a low with the market and needing money at that point.
The market remained down for several years after the tech stock crash 20 years ago. I knew that the pandemic reaction would be temporary and I decided to not ride it to the bottom but get back in when the fear in the market subsided.
And the feel better factor is a big part, I sleep better at night and that is important for me.
Yes, at a cost. You pay the taxes on the rollover. The ROTH grows tax free from that point forward, but you still need to pay the taxes deferred by the 401k/IRA.
Yes, distributed, taxed, and then moved into a ROTH IRA.
AND IIRC there is a limit that can be reinvested in the ROTH each year. $7K?
I first IRA's were in the 80's, first ROTH, 2009 IIRC.
Medial costs can offset distribution taxes. My dad was in a memory care canter for about 4 years. I was able to liquidate his IRA's enough to offset the medical cost and not pay additional taxes.
This may have or might disappear.
But 100% of that donation is gone...vs. only the taxable amount of a non donation.
But if making donations anyway that would be helpful. I donate my time, and a lot of it.
Yes, I left that out. I was just was not clear if you could reinvest in a ROTH IRA after the 70.5 age.
You can if you have earned income.
And distributed ABOVE THE RMD, IF ANY is a big 'un cuz the RMD isn't eligible and you have to take it anyways.
That's on new contributions that have to come from current earned income; you can convert as much as you have stomach to pay the taxes on to do so.
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Hyperbole, you get the drift/intent.
Just pointing possible issues for the uninformed. These subtleties may be obvious to some folks, but I'm sure you can see from this discussion that the level of knowledge varies.
My comments weren't addressed directly at you, but your "teaching moment" check writing comment opened the door for another teaching moment that added some details for folks to be aware of. We're both just trying to help.
Having a checkbook associated with a basic checking account is very different than having a checkbook associated with an IRA. The balance shown in a basic checking account is all cash. You either have enough cash in the account to cover the check or you don't. "The balance in my checking account is $10K. My $5K check will be covered."
In the IRA situation, I can certainly see a certain segment of IRA's owners saying "The balance in my IRA is $50K. My $5K check will be covered." Unless $5K of the $50K is in cash, the check will bounce. The writing of the check is not (at least in my experience) going to trigger a trade to cover it. Some folks might not make that distinction.
I'd wager that if you asked a bunch of random IRA owners if they are allowed to have a checkbook for their IRA account, many, if not most, wouldn't be sure. Then ask them if they know how it would work with regard to having cash available, how withholding taxes are handled, on what date the distribution is recorded, etc. and I'd wager that most would not be able to answer those questions.
By the time you find out that your check wasn't cashed in what you might consider a timely manner, it's a little late to find a "better-managed charity", at least for that year. By that time, the harm has been done.
Or, the check writer might think that the distribution is recorded based on the date that they put on the check or maybe the postmark date on the envelope. Those are not unreasonable assumptions to make, but it's not how it works in the QCD world. Assuming that you deal one-on-one with donors in your capacity as President of the local community college foundation, I'm sure that you have had to hold their hands on occasion as they navigate the complexity of the chartable donation arena. Even the richest, most knowledgeable business people often need some help. That's all I'm trying to do for those following this thread.
I think by 'invested in the indexes' Derby was asking if you own an index fund or ETF (e.g. DIA or IVV).
E*Trade Pro does most of this - it's a great java app that tracks your full portfolio real-time, and has trading and research capabilities.
The VIX (Volatility index) is probably the most accurate predictor.
It has risen from 16 to 27 in the last week.
And who pays the commissions for all those trades?
Sorry...I couldn't resist. Just trying to keep it light.
Not an index fund,, normally a combination of 25~35 different mutual funds by multiple fund managers, through my money manager and Raymond James.
I pay the commissions through individual funds and or 1% annually of my portfolio value to my money manager.
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