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RMD withdrawals — Bond funds or stock funds first
VBTLX VANGUARD TOTAL BOND MARKET INDEX
VTABX VANGUARD TOTAL INTL BOND INDEX
VTIAX VANGUARD TOTAL INTL STOCK INDEX
VTSAX VANGUARD TOTAL STOCK MARKET INDEX
If I used to be king: as soon as a inventory is bought, you maintain it for 30 days.
Re: RMD withdrawals — Bond funds or stock funds first
Might I ask why there’s this misunderstanding? The dividend fee (yield) of those two investments is clearly proven on Vanguard.com. Plus one ought to know concerning the tax charges for non-qualified abnormal earnings and certified abnormal earnings and what sort of earnings every fund pays.
Separate from RMDs: One can change funds throughout the IRA to rebalance.
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Matter Writer
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Re: RMD withdrawals — Bond funds or stock funds first
As to why my understanding could also be incorrect I can solely reply that that is one thing I take a look at a few times a yr and you do not know what you do not know.
The 1099 dividend assertion I get from vanguard reveals that my dividends are nearly completely from the VTSAX whole inventory market fund.
If I used to be king: as soon as a inventory is bought, you maintain it for 30 days.
Re: RMD withdrawals — Bond funds or stock funds first
I feel the purpose right here is that investing is ahead wanting and tax preparation (1099) is backward wanting. Co-mingling these views is dangerous, particularly when issues are altering or could change considerably (asset location, allocation, rates of interest …..).
If you uncover that you’re driving a useless horse, the most effective technique is to dismount.
Re: RMD withdrawals — Bond funds or stock funds first
Indianrock wrote: ↑Thu Sep 12, 2024 7:37 am
The 1099 dividend assertion I get from vanguard reveals that my dividends are nearly completely from the VTSAX whole inventory market fund.
The 1099 doesn’t present dividends paid contained in the IRA.
Signal on to your Vanguard account. Within the “Present” drop down management on the “Holdings” web page choose “Nontaxable Positive aspects”. Set the “Quarter” to the interval you want to study. You will notice the dividends paid in your IRA.
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Re: RMD withdrawals — Bond funds or stock funds first
Indianrock wrote: ↑Thu Sep 12, 2024 6:27 am
I have been withdrawing from VTSAX yearly, reinvesting in the identical fund in a taxable account. Up to now I take no cash out of Vanguard from IRA or taxable accounts. This implies I am transferring dividend earnings into the taxable class, I am questioning if I needs to be utilizing the bond funds for RMDs to reduce taxable dividends. I suppose there is not any purpose I could not promote VTSAX within the tIRA( for the RMD) and purchase a bond fund within the taxable account which might assist hold my allocation in line ( tends to get overweighted in shares ), however would additionally scale back dividend earnings within the tIRA. ??
The dividends produced by a inventory index fund (VTSAX) are very totally different than the dividends produced by a bond index fund (VBTLX).
In a taxable account, your desire could be VTSAX – assuming you’d moderately pay much less cash to the IRS.
If you do not have sufficient bonds total in your portfolio, then promote some inventory within the IRA and use that cash to purchase extra bonds within the IRA.
Extra tax stuff right here: https://www.bogleheads.org/wiki/Tax_basics
Regards,
“All of us could be higher traders if we simply made fewer selections.” – Daniel Kahneman
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Re: RMD withdrawals — Bond funds or stock funds first
Properly the dividends ( which in my case appear to be nearly solely on VTSAX) are going to get taxed eventually. If I take the RMD from different funds the dividends shall be taxed later so I suppose the query then is will my tax fee be greater later. The allocation and incomes of dividends does not change since no matter funds are concerned exist in the identical variety of shares whether or not in tIRA or taxable ( in my case ).
If I die and my spouse’s earnings goes down on account of adjustments in what I get from pensions or social safety, that is one other complication.
Somebody really helpful leaving bond funds within the tIRA, however did not say why.
If I used to be king: as soon as a inventory is bought, you maintain it for 30 days.
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Re: RMD withdrawals — Bond funds or stock funds first
ehh wrote: ↑Thu Sep 12, 2024 7:48 amIndianrock wrote: ↑Thu Sep 12, 2024 7:37 am
The 1099 dividend assertion I get from vanguard reveals that my dividends are nearly completely from the VTSAX whole inventory market fund.The 1099 doesn’t present dividends paid contained in the IRA.
Signal on to your Vanguard account. Within the “Present” drop down management on the “Holdings” web page choose “Nontaxable Positive aspects”. Set the “Quarter” to the interval you want to study. You will notice the dividends paid in your IRA.
Thanks, I am going to do this now
If I used to be king: as soon as a inventory is bought, you maintain it for 30 days.
Re: RMD withdrawals — Bond funds or stock funds first
Indianrock wrote: ↑Thu Sep 12, 2024 7:54 amSomebody really helpful leaving bond funds within the tIRA, however did not say why.
I feel all responses had been one kind or one other of “Depart bond funds within the tIRA.” That is as a result of you’ll pay much less earnings taxes that method. And should you pay much less earnings taxes meaning you should have more cash to spend on your self and household.
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Matter Writer
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Re: RMD withdrawals — Bond funds or stock funds first
“The dividends produced by a inventory index fund (VTSAX) are very totally different than the dividends produced by a bond index fund (VBTLX).
In a taxable account, your desire could be VTSAX – assuming you’d moderately pay much less cash to the IRS.
If you do not have sufficient bonds total in your portfolio, then promote some inventory within the IRA and use that cash to purchase extra bonds within the IRA.”
If I used to be king: as soon as a inventory is bought, you maintain it for 30 days.
Re: RMD withdrawals — Bond funds or stock funds first
Indianrock wrote: ↑Thu Sep 12, 2024 7:54 am
Somebody really helpful leaving bond funds within the tIRA, however did not say why.
Bond fund dividends will not be “certified” – are taxed as “abnormal” earnings. Inventory fund dividends are (largely) “certified” – are taxed at a decrease fee than is “abnormal” earnings. Therefore, in a taxable account, you pay extra tax on a greenback of bond fund dividends than on a greenback of inventory fund dividends. Your RMD (or any withdrawal from the IRA) is taxed as “abnormal” earnings. For those who withdraw inventory fund dividends from an IRA you pay extra tax than if the inventory fund resided in your taxable account and also you merely paid the tax on the dividends. For those who withdraw bond fund dividends from an IRA you pay the identical tax than if the bond fund resided in you taxable account and also you merely paid tax on the dividends. Therefore the usual recommendation – to the extent sensible, hold your bond funds within the IRA and your inventory funds within the taxable account. In fact, municipal bonds are an exception.
