When Taking RMDs, How Do I Avoid Locking in Losses? I’ll Be 72 Years Old Soon, and My Stocks Are ‘Way Down’ This Year

Ask an Advisor: When Taking RMDs, How Do I Avoid Locking in Losses? I’ll Be 72 Years Old Soon, and My Stocks Are ‘Way Down’ This Year

I will be 72 years old on Feb. 10, 2023. I have a traditional individual retirement (IRA) account. Most of the money is tied in stocks, and the stocks this year are way down. If I sell to pay the required minimum distributions (RMDs), then I have to sell for a huge loss. How do I avoid that loss and pay for RMDs? Any strategies?


For some retirees, required minimum distributions are irrelevant because the retirees need to withdraw the money to cover expenses anyway. So the fact that they are required to do it is pretty much moot.

For others, which may include you, RMDs can become a real sticking point. They limit your control over your distribution schedule, tax management, investment strategy and estate plan.

If you have questions specific to retirement withdrawal strategies, a financial advisor can help.

Bear Markets and Selling at a Loss

Your particular issue isn’t hard to see. The S&P 500 is down about 17% as of late November. The specific stocks you own may be down even more than that.

One of the basic behavioral tenets of successful long-term investing is to avoid panic-selling in situations like this. If you do, it’s possible that you’ll miss out on any potential future growth and simply solidify your losses. Holding on for the long term is likely a better call.

In your case, it sounds as though you have that emotional reaction under control but feel backed into a corner by your RMD.

Timing Your First Required Minimum Distribution

As the name suggests, your RMD is required. You can’t just skip it. Otherwise, the IRS hits you with a penalty equal to 50% of the amount you should have taken but didn’t. That’s steep, so let’s certainly avoid that.

Given that this will be your first required minimum distribution, however, you do have a little bit of wiggle room regarding when you take it.

As things stand now you’ll be responsible for an RMD for 2023 – the year you turn 72 – thanks to the Setting Every Community…


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