Option 1:
Take Your Distribution from Another Retirement Account
If you have multiple pre-tax or tax-deferred retirement accounts, you can select the retirement account from which to take your distribution. The IRS allows two options to fulfill your annual RMD requirement:
- Take the full RMD amount from a single retirement account.
- Split the RMD among multiple retirement accounts, taking portions of funds from different accounts to equal the total required distribution (excluding tax-free ROTH IRA withdrawals).
For example, if you have both a traditional IRA invested in stocks and bonds, and a self-directed traditional IRA invested in precious metals, you may opt to take your distribution from either account. Consider the cash balance in each account, as well as the liquidation process for different asset types. In this example, traditional assets like stocks and bonds are easier to liquidate than precious metals, so a distribution from the traditional IRA will likely be faster, easier, and require less paperwork.
Option 2:
Liquidate Assets – Sell Precious Metals For Cash
If your account is fully invested in precious metals and you have an insufficient cash balance to meet the RMD, you can sell a portion of your metals assets to meet the RMD requirement. When selling metals, keep in mind that you may not be able to recoup your full purchase price for the assets, especially if the metals were acquired recently before the required RMD.
To sell precious metals, you will need to contact a precious metals dealer. The dealer will negotiate a cash sale price and provide the forms necessary to process the sale.
The process to sell your assets through a precious metals dealer may take a few weeks, so plan to initiate the process well before the RMD deadline imposed by the IRS.
Option 3:
Take an In-Kind Distribution of Precious Metals
An in-kind distribution involves removing the precious metals from your retirement account and taking personal possession of the assets. This option includes additional costs for removing the metals from your account, including processing, handling, and shipping of the physical metals from the depository where they are stored.
In addition to processing fees assessed by your custodian, you will also be responsible for the shipping and handling costs of transporting the physical metals from their storage facility at your depository to a physical mailing address where you can take possession. This option can be costly, as the substantial weight of the metals warrants high shipping costs, and the value of the assets increases the shipping insurance fees.
If the cash balance in your IRA account is insufficient to cover these costs and you are still earning income, you can make a contribution to cover the difference. If you are not earning income and don’t qualify to make a contribution, you may need to liquidate some of your metals assets to offset the additional costs of an in-kind distribution.
Penalties
Failure to take your RMD each year may result in IRS penalties. If you opt for RMD Options 2 or 3, you must initiate the process annually by completing the corresponding paperwork each year.
Work With Your IRA Custodian
Remember that Preferred Trust is your custodian; we are not a precious metals dealer, and your precious metals dealer cannot administer transactions for your IRA. Always contact Preferred Trust directly with questions about your IRA.
Our Preferred Trust Client Service Team is Here to Help!
We’re ready to help you understand your distribution options, answer your questions, or assist with the necessary forms. Call us at 888-990-7892 or email ClientService@ptcemail.com.
