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catonsville · Feb 22, 2014, 03:32 PM

Can I transfer a stock from an IRA account to a Taxable Account and still satisfy my Required Minimum Deduction for the year?

ebaines · Feb 22, 2014, 05:41 PM

Sure - just be aware that the transfer is a taxable event, so you will owe income taxes on the tax-deffered portion of the distribution. Now your cost basis in the taxable account is the after-tax fair market value of the distribution.

AtlantaTaxExpert · Feb 22, 2014, 05:59 PM

If the custodian allows it; some will not do a transfer, but rather insist you SELL the stock and repurchase it using the proceeds from the sale.

catonsville · Feb 23, 2014, 07:03 PM

Originally Posted by ebaines

Sure - just be aware that the transfer is a taxable event, so you will owe income taxes on the tax-deffered portion of the distribution. Now your cost basis in the taxable account is the after-tax fair market value of the distribution.

Is there any Tax advantage of doing it this way? Due to the new cost basis. I kind of think, that if I do this at a new higher cost basis that makes it better when I sale later.

AtlantaTaxExpert · Feb 23, 2014, 07:42 PM

Yes, the higher basis will reduce the capital gains you would owe.

Also, remember that you have to pay the tax on the RMD, and you will NOT have the money from the sale of the stock to pay that tax.

catonsville · Feb 23, 2014, 07:54 PM

Originally Posted by AtlantaTaxExpert

Yes, the higher basis will reduce the capital gains you would owe.

Also, remember that you have to pay the tax on the RMD, and you will NOT have the money from the sale of the stock to pay that tax.

I hope Stock Account will let me do it if not I will have to move the account to one that will allow me to do it. Thanks

AtlantaTaxExpert · Feb 23, 2014, 09:00 PM

Glad to help!

ebaines · Feb 24, 2014, 06:40 AM

There is a bit of a tax advantage in taking a withdrawal from your IRA and reinvesting in the same or similar asset (the same mutual fund, for example), but only if the value of the investment continues to rise. The reason is that capital gains in an IRA are deferred until you take a withdrawal but are then taxed at ordinary income rates, whereas capital gains in a taxable account are tax-deferred until you sell and are then taxed at the capital gains tax rate, which is lower. So you keep more of the profit of the capital gain if it's moved outof the IRA. In your case you're talking about a manadatory withdrawal, and if you don't need the cash for living expenses - and don't see a need for it for at least a few years to come - then investing it makes sense.

catonsville · Feb 24, 2014, 08:31 PM

I found that my Stock Account Custodian will allow me to just transfer without sale of stock. Another question, I intend to make this transfer now, will I have to pay estimated tax in the same quarter as the transfer? Or can I do it in the 4th Quarter before the end of year?

AtlantaTaxExpert · Feb 24, 2014, 08:44 PM

Estimated taxes are due by 15 April 2014, UNLESS you have had enough taxes withheld from other sources to satisfy the tax liability.