- Jurisdiction
- New Jersey
I have been trying to get an answer to this question for a long time and have not been given a definitive answer after talking to my accountant, fund managers, and banks. So, I thought I would pose the question here. This has to do with in-kind transfers of mutual funds when taking a RMD in any colander year. I will try to be brief and make it simple.
I have many retirement accounts in two different financial institutions. I have set up accounts in each of these institutions where I have a retirement accounts and a personal accounts with very much the same investment in each. The vast majority of the funds are invested in the retirement accounts.
At the end of a preceding year, I calculate the value of all retirement accounts (Dec. 31) and calculate, based on IRS actuarily tables, what my RMD is for forthcoming year. Since I have the entire forthcoming year to make the transfer, I watch the market prices and decide when to make the transfer. My thinking is that the higher the fund price is at the time of transfer, the more shares will still remain in the retirement account, the less (in shares) I will be transferring out of the retirement account.
But I'm getting killed on capital gains because it appears that if I make the transfer before the last capital gains are paid (usually first 2 weeks of December and they are substantial), the capital gains are for all the shares that were transferred before the last gains were paid in the retirement account even though those gains were paid during the entire previous year while the shares were still in the retirement account. Is that about as clear as mud?
So, the question is, is it better to do a sell-buy for the distribution (out of retirement account into personal account) or do the in-kind transfer?
It looks to me that the capital gains follow the shares regardless of when they were paid. Do any of you know?
I have many retirement accounts in two different financial institutions. I have set up accounts in each of these institutions where I have a retirement accounts and a personal accounts with very much the same investment in each. The vast majority of the funds are invested in the retirement accounts.
At the end of a preceding year, I calculate the value of all retirement accounts (Dec. 31) and calculate, based on IRS actuarily tables, what my RMD is for forthcoming year. Since I have the entire forthcoming year to make the transfer, I watch the market prices and decide when to make the transfer. My thinking is that the higher the fund price is at the time of transfer, the more shares will still remain in the retirement account, the less (in shares) I will be transferring out of the retirement account.
But I'm getting killed on capital gains because it appears that if I make the transfer before the last capital gains are paid (usually first 2 weeks of December and they are substantial), the capital gains are for all the shares that were transferred before the last gains were paid in the retirement account even though those gains were paid during the entire previous year while the shares were still in the retirement account. Is that about as clear as mud?
So, the question is, is it better to do a sell-buy for the distribution (out of retirement account into personal account) or do the in-kind transfer?
It looks to me that the capital gains follow the shares regardless of when they were paid. Do any of you know?