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How Will I Manage My IRA Withdrawals?

Now that I have the basics of required minimum distributions down pat, I’m faced with investing my IRA assets in a way that will generate the cash flow I’ll need to take them every year, beginning in 2017.

I suppose, way back when, I could have assembled a portfolio of U.S. Treasury securities and met at least the first few required distributions by earning a 4% to 5% annual yield.

Those days are long gone.

Nevertheless, I’ve discovered that managing a portfolio to meet distribution requirements won’t be all that difficult.

Even for someone like me, who has 13 separate traditional IRAs at banks, credit unions and online brokers invested exclusively in fixed-maturity obligations.

According to the IRS, although “(a)n IRA owner must calculate the (required minimum distribution) separately for each IRA that he or she owns,” the owner “can withdraw the total amount from one or more of the IRAs.”

Great!

That means I don’t have to schedule maturities to match the distributions in each IRA every year.

For example, I can buy a CIT Bank 10-year brokered CD today for my Fidelity IRA and withdraw the amount of required distributions attributable to it in 2019 from a GS Bank 7-year brokered CD maturing that year in my Vanguard IRA.

In other words, I can buy long-term marketable obligations in a way that should avoid having to sell them (at a possible loss) prior to maturity.

I have similar flexibility with long-term IRA CDs established directly at banks and credit unions. I should be able to schedule maturities so I don’t have to worry about early-withdrawal restrictions or penalties.

I can get further help from institutions that, formally or informally, allow penalty-free early withdrawals of principal to meet required minimum distributions.

(The best I have is Union Bank, which not only offers unlimited no-penalty withdrawals after age 70 1/2, but allows me to change the maturity of IRA CDs annually because I’m over 59 1/2.)

“Laddering” maturities would probably make sense, if I had the discipline required. But my ladders tend to have only two rungs, often quite far apart.

Anyway, I shouldn’t have trouble investing my IRA funds all the way through my last required distribution period, which begins in 2061 — when I’m 115!

Until then, all I have to worry about are yield trends.

And, by 2061, the “extended period” of zero interest rate monetary policy should be over.

Shouldn’t it?

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