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Explorer ○○

Fund Shedding as Annual RMD Strategy

Reposted here from an A/B forum thread ("Hybrid Funds") turned feedback loop:

My current plan is to claim SS at 70 (two years away) and to gradually reduce/eliminate supporting funds in a solo 401(k) plan as post-70 RMD's need to be taken, likely after IRA rollovers from 401(k) plan assets.

The basic idea is to shed one of five global/international/smidcap supporting funds anually as post-70 RMD's occur (each holding is approximately the annual RMD, as presently calculated). That would gradually reduce the age 70 portfolio by attrition down to a "til death do us part" portfolio by age 75, with VWIAX, VWENX, DODBX, DODIX, VPCCX, POGRX, and POAGX remaining, subject to further A/A tweaks down the road.

I remain a firm believer in management diversification in both the accumulation and withdrawal/distribution phases. So, I'll probably stick with the D&C and Primecap holdings as supporting VWIAX/VWENX, if only for juice and excitement that doesn't involve some generic blue pill I get way too many offers for.

Changes in RMD regs under pending legislation may alter the calculus though, especially if Congress adjusts the mandatory RMD age up to 72.5, which I support.

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Re: Fund Shedding as Annual RMD Strategy

The SECURE Act, recently approved by the House of Representatives, would raise the RMD age from 70.5 to 72, among other provisions. Senate consideration of the bill is expected soon, according to Sen. Chuck Grassley, chairman of the Finance Committee, despite some internal squabbles over other provisions in the House-passed bill. Stay tuned.

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Re: Fund Shedding as Annual RMD Strategy

Now that "Act" sounds interesting and I'm glad you made reference to it.  For our household, with my wife just now turning 69, the additional year and a half extension to the RMD deadline would give our household budget a welcome boost.  We would welcome that additional time to help figure our total annual withdrawals and where to place excessive funds.

BTW, I never imagined one of my retirement concerns would be to manage 'excessive' money.

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