Skip the Forced Sale: Move Shares Out of Your IRA for RMDs

Most retirees think required minimum distributions mean one thing: sell shares, take the cash, pay the tax. But there's a move the IRS quietly allows that almost nobody talks about — and in a down market, it can save you from locking in losses you didn't have to take.

The strategy is called an in-kind distribution. Instead of liquidating your position inside the IRA and wiring out cash, you transfer the actual shares directly to a taxable brokerage account. The IRS taxes you the same way — the fair market value of those shares on the distribution date counts as ordinary income, just like a cash withdrawal. Same tax bill, zero forced selling.

Read more Pastor Retired Comfortably on $30K a Year — Here's How →

Here's why that matters right now. If the market is down and you sell to meet your RMD, you crystallize the loss inside the account and the cash you pull out is worth less — double pain. Move the shares in-kind instead, and you still own the position. When the market rebounds, you capture that upside in your taxable account. Your cost basis resets to the share price on the day of transfer, which also sets up potentially favorable long-term capital gains treatment down the road.

The mechanics are straightforward. Contact your IRA custodian, request an in-kind distribution of a specific number of shares equal to your RMD amount, and confirm the valuation date. Not every custodian makes this easy, so call ahead and get it in writing. Timing matters — you want the transfer completed before your RMD deadline to avoid the IRS penalty, which is steep at 25% of the shortfall.

This isn't a loophole or a gray area. It's a fully sanctioned IRS rule that most financial advisors underuse. If you're sitting on appreciated or beaten-down positions you believe in long-term, there's no rule that says you have to blow them out just because you turned 73. Continue reading at Yahoo.