m2m
Initiate Member
Joined: Dec 19, 2011 0:17:52 GMT -5
Posts: 81
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Post by m2m on Nov 25, 2014 13:35:55 GMT -5
Hello experts!
Your kind assistance please!
I am not an investor - just happen to have had a small 401K that was rolled over to an IRA. Retired, starts Required Minimum Distribution in 2015 from small IRA account Mostly dividend stocks – but dividends not enough to cover RMD.
Thinking of selling some partial positions now to lock in the high prices; keep some for dividend reinvestment growth. Sell some? Park where?
Examples: Stock AAA bought in 2009 and 2011 has grown from price appreciation and dividend reinvestment to a cumulative gain of 295%. With the current dividend, yield based on cost is 4.2% (double the current yield on the current price)
Stock ZZZ bought in 2010 has grown from price appreciation and dividend reinvestment to cumulative gain of 165%. With the current dividend, yield based on cost is 9.3% (yield on the current price is 4.2%
Much appreciate your kind advice, thoughts. Thank you!
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Ombud
Junior Associate
Joined: Jan 14, 2013 23:21:04 GMT -5
Posts: 7,592
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Post by Ombud on Nov 25, 2014 18:42:28 GMT -5
Sorry. Not enough info for me, maybe the others can read through the lines. What's the: ♢ payout ratio ♢ PEG ♢ sector expected to increase or decrease
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m2m
Initiate Member
Joined: Dec 19, 2011 0:17:52 GMT -5
Posts: 81
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Post by m2m on Nov 26, 2014 9:07:34 GMT -5
Thank you so very much Ombud.
I am really so very ignorant on money stuff. Truly need help. Just fortunate to have this Small IRA that has been on auto-pilot due to this ignorance and serious medical issues.
Stock AAA is ABT. Stock ZZZ is JNJ.
Thanks again, appreciate very much your kind assistance!
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ModE98
Administrator
Start Investing admin
Joined: Dec 20, 2010 16:11:39 GMT -5
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Post by ModE98 on Nov 26, 2014 17:28:39 GMT -5
m2m, you have 2 excellent stocks with good yields. Why not keep them (even in a market correction) and just fund other quality issues with available cash when appropriate? DO NOT TRY TO GET IN TO ACTIVE TRADING OR GO OUT ON MARGIN! Stay carefully within your means. (My two cents).
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m2m
Initiate Member
Joined: Dec 19, 2011 0:17:52 GMT -5
Posts: 81
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Post by m2m on Nov 27, 2014 0:55:16 GMT -5
Thank you so much Mod. Yes - they are excellent stocks and the yield from original cost is great. Active trading, go out on margin - definitely not - I don't know how! And yes, I need to stay carefully within my meager means. Very wise advice - thank you!!!! These are in an IIRA account. As required by law, I must start to withdraw the RMD (Required Minimum Distribution) in 2015. There is no cash in the account so I must sell equities to fulfill the RMD. I thought that I'd lock in the high prices now and maybe sell partial positions. If from each stock, I sell some shares that will amount to the original total purchase price, there will still be some shares left that will continue to grow. It will be like taking some profits off the table and let the house money play. I think this could work but my little brain needs some sanity check. Thanks again ... and best wishes to all for a Happy Thanksgiving!!
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m2m
Initiate Member
Joined: Dec 19, 2011 0:17:52 GMT -5
Posts: 81
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Post by m2m on Nov 28, 2014 3:27:19 GMT -5
Thank you so much WXYZ. I do pay income taxes- so the first one does not work. Transfer in-kind or sell then re-buy sounds great. However, I believe that either way, the IRS still considers it as a distribution that is taxable as ordinary income. Hence the broker will report to the IRS the full value of the stock on Form 1099-R. Good thing is when sold later from the non-IRA account, tax will only be on capital gains based on the new, higher cost basis. (Versus ordinary income tax on full stock value in IRA.) Yes, I do want to remain invested in the companies. But I think it is good to at least lock in some profits – so I think I’ll move half–positions to a non-IRA brokerage account. The rest will remain in the IRA and grow on re-invested dividends. Thanks again... and have a wonderful day!
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Bluerobin
Senior Associate
Joined: Dec 20, 2010 14:24:30 GMT -5
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Location: NEPA
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Post by Bluerobin on Dec 12, 2014 7:53:17 GMT -5
I had a small 401 K that I rolled into an IRA after I retired. Then, I eventually rolled that into a Roth IRA and paid the tax. Would that work for you? I paid the tax from the checking account, so I would not dilute the IRA. Now, I don't have to take a minimum distribution from the Roth.
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m2m
Initiate Member
Joined: Dec 19, 2011 0:17:52 GMT -5
Posts: 81
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Post by m2m on Dec 12, 2014 23:30:09 GMT -5
Thanks Bluerobin. Fantastic idea - unfortunately would not work for me.
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