Advice on minimizing transaction cost for required minimum distribution
Here’s a summary of the main problem and solutions discussed in the conversation:
- Main Problem: The user wants to know how to move a lightly traded security from an IRA to a taxable account without incurring significant losses from bid-asked spreads while needing to make a required minimum distribution (RMD).
- Solution: Fidelity confirmed that users can transfer shares of securities in-kind out of an IRA to a brokerage account, as long as the brokerage account can accept the securities.
- Important Consideration: The number of shares transferred will be valued at the security’s ending day value, and taxes cannot be withheld on in-kind IRA distributions. Taxes can only be withheld when transferring cash.
- Next Step: The user inquired about the process to transfer a security from their IRA to their Fidelity brokerage account after learning that it was possible.
Here’s the full thread
I believe Fidelity will not transfer securities out of an IRA account. Assuming that’s correct, what is the best way to move a security from an IRA to a taxable account if it is lightly traded and sometimes has significant bid-asked spreads? Is there a way to game the system to buy my own security without losing the bid-asked spread or at least to minimize the loss? I have to make a required minimum distribution.
Hi, @JayG.
We recommend consulting with a tax professional regarding your specific situation and strategies for taking your required minimum distribution (RMD). In the meantime, you can learn more about taking your RMD at the link below.
Taking your RMD: https://www.fidelity.com/building-savings/learn-about-iras/rmd 🟢
Please reread my question. It has nothing to do with tax law.
Thanks for following up with us, @JayG.
To clarify, you can transfer shares of securities in-kind out of an IRA as a distribution. You can do so as long as you have a Fidelity brokerage account that can receive the securities you’re moving out of your retirement account.
There is some nuance to this, though. First, the number of shares that you move will be priced at that particular security’s ending day value. Second, you cannot withhold taxes on an in-kind IRA distribution. Taxes can only be withheld when you’re moving cash. Now, if you choose to transfer cash with your shares, you will then be able to withhold taxes, which are taken from the cash amount. 🟢
That’s good news. Thanks. I didn’t know Fidelity could do that. How do I transfer, say, all of a certain security from my IRA to my Fidelity brokerage account?