Required Minimum Distributions are meant to reduce your funds in a timely manner and to fulfill your obligation of paying taxes on your deferred investment. Good planning and healthy stock market returns can leave you with a substantial balance in your account for years to come and still meet your distribution requirement.
This year is a prime example of how this can be accomplished. Your RMD for 2017 was established as of December 1, 2016. Example: Market Value $400,000. divided by 25.6 (age 72)is $15625. This is the amount that needs to be withdrawn before December 15th, 2017 (a safe date with no penalties).
To keep your Market Value (balance of the account) at $400,000. as of December 31, 2017 you need to accumulate dividends/interest of $15,625 in this account during 2017 and/or an increase in the market value of the account. That means the average earnings and increase in the market value needs to be at 3.9%.
Where will you be at on June 30, 2017? Please review your Brokerage Statements at that time. Has the total value increased by at least half of your Requirement Minimum Requirement for 2017? In the Example, the increase needs to be at least $7,800. to date. Hopefully, a simple review of your account will give you the answer.
Now leave those earnings in CASH so that you can withdraw the required amount without selling additional investments to cover the requirement. If at all possible when you withdraw your RMD have your broker withhold both federal and state tax so that your tax obligation is met before April 15th.
The balance is your to meet other personal desires and you have preserved your retirement funds for another year.
This process may not be completely obtainable in a down market but funds earned in the current year kept in CASH up to your RMD amount will enable you, at least, to partially meet your requirement without depleting your retirement account with sales.
I only used $400,000. as an example. This process can be used for any amount using the Market Value of your account at previous year end and your current age.
Please call me if you are interested in exploring this idea further. Good planning and knowing the dollars you need to work with are the keys to a happy, worry free retirement.