Alternatives To The Required Minimum Distribution

Many people, when they are retired, need to take distributions from their retirement plans to pay for their needs and goals. Other people with additional resources may not need to make the required minimum distributions. Here are some tips for people who do not want the distribution that could be worthwhile.

Like Kind Distributions
If you have an Individual Retirement Account (IRA) that holds stock or mutual funds that you really like, and believe these investments will continue to fit well into your portfolio, you do not have to sell them in order to complete your required minimum distribution. You can have the IRA custodian simply transfer the funds to a non-retirement account as a “like kind distribution.” You of course would need to pay the income tax on the distribution as if you withdrew the monies from the account. But in this way you can keep assets that you like.

Paying Estimated Taxes
If you are an individual that pays quarterly income tax payments to the state or federal government and do not need the required minimum distribution from your retirement account, you can make arrangements for the retirement plan to make the required minimum distribution in December of each year directly to the IRS or state tax board as an estimated tax payment.

Normally, you are required to make equal quarterly payments for your estimated taxes. However, funds paid from a retirement account in December would not trigger any penalties for lack of payment earlier in the year. When your payment is made in December it is like having an interest-free loan from the government for a number of months during the course of the year.

About the author

Michael Chamberlain, CFP®

Hello. My name is Michael Chamberlain CFP®, the principal of Chamberlain Financial Planning and Wealth Management. Our firm is “fee-only” with offices in Sacramento, Campbell and Santa Cruz California. “Serving clients from the mountains to the sea.”

Our mission is to help clients realize their full potential today while planning for an abundant tomorrow through comprehensive financial planning and collaborative decision-making.

As an experienced investment and planning professional, I have had the privilege of being interviewed by and contributing to hundreds of articles in such publications as Money Magazine, Financial Planning Magazine,,, Nerdwallet,, Yahoo Finance and more.

I hope that you spend some time at the FiGuide site and learn more about the financial matters important to you. To learn more about our firm, visit our website or give us a call at 800-347-1340.


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  • Hi Michael: I read your post about the RMD distribution and find it very interesting. I am a retired person with several funds in an IRA part of my portfolio and other funds in the non-IRA section of my portfolio. I currently have my funds invested through Edward Jones and am of the age where I have to take out money each year for the RMD. I was told that as I get older, currently 79, the RMD requirement would get so large, 8%+ that I would liquidate the IRA part of the portfolio and it would eventually go to a zero amount. I certainly want to preserve the existing funds as long as I can and am looking for a way to get funds out of the IRA into a non-IRA account so that I can prevent the zero effect as I age. I was told that I cannot transfer funds from an IRA to a non-IRA and yet you indicate that I can. I am interested in how that can happen and would appreciate a response to my email address. Thanks in advance, Sid Kraft

  • Mr. Chamberlain,

    I have been recieving conflicting advice (not having talked to IRS directly, yet) regarding RMD’s. I have been told that if the money is not needed, that the RMD can be rolled over to a Roth IRA. This makes sense to me, since I am required to pay takes on the distribution, why would the Gov’t care where it goes after that. Yet others have told me it can’t be done and refer me to IRS Pub 590, which does seem to say that you can’t do a direct roll-over of a distribution to a Roth. What is your interpretation?

    Thank you

  • I have approximately 170,000 in the bank. $130 in a CD which is coming due and $40,000 in savings. What can I put it in that is conservative but will pay interest and should I consult with Vanguard?
    I am retired and need to do something to increase this amount.

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