Can I Put My RMD Into Real Estate or Stocks Without Being Double Taxed?

If I am not spending all my required minimum distribution (RMD) money each year, can I roll some of this back into my stocks? If so, will I be taxed on the amount rolled back in? Would this be considered double taxation? If I’m only taxed on the additional interest this money generates when I reinvest it, how would this interest be calculated & kept track of? Also, would this extra income be better spent on some other investment, like real estate, considering that you can write off expenses?

-Karen

You can use your RMD money in any way you like, including reinvesting it in stocks. It would then behave like any other non-retirement investments you have. The RMD itself would not get taxed again, so there would be no double taxation. But if the new investments generated any income, that would be taxed.

Each year, you receive 1099s for any interest or dividends earned on securities or information about any securities that were sold. If you chose to invest directly in rental real estate, you would be taxed on any rental income in excess of expenses. Other real estate investment options would be taxed more like regular securities than direct ownership of rental properties.

Consulting with a financial advisor may help determine which investments would work best along with your existing investments and retirement accounts. Connect with a fiduciary advisor.

Required minimum distributions (RMDs) are the mandatory withdrawals taken from pre-tax retirement accounts.

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RMDs must be withdrawn from pre-tax retirement accounts whether you need or want to take the money out. Since that money has not yet been taxed, the IRS wants to make sure the withdrawals are taken and the money is finally taxed.

But what you do with your RMD money is totally up to you. Among the many options for that money you could:

Use it to pay regular expenses

Invest it

Contribute to a Roth IRA (if you have enough earned income)

Donate it directly to a charity as a qualified…

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