I am just curious why, in the discussions about what to do with one's RMD, there has been little to no mention of using at least some of the available funds as Qualified Charitable Distributions. They can come directly from the RMD amount required and have the advantage of not counting as Ordinary Income for federal income tax purposes. For those investors with "extra cash" goodness knows there are many charitable 501 (c)3 organizations that are always in need of assistance.
Another question that has come to mind: do most MFO correspondents with questions about "where to put our money" just lump 'banks' and 'credit unions' in one large category? It strikes me that credit unions might actually be a good place for investments in certificates of deposits with relatively high interest returns in comparison to many of the large banking systems.
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Always nice to see new folks speaking up here at MFO- welcome.
Welcome to the board. Think many folks here may use their brokerage account to park their RMD fund in high yield money market funds (pay over 4%). In contrast, many credit unions and banks pay much less than 4%. My saving account at a credit union pays 0.5%! I keep sufficientl fund to pay the bills, the rest stays at my brokerage.
Also other products such as treasury bills and broker CDs of various duration that pay even higher yields. One year call-protected CDs can be purchased at Fidelity that yield 5.0%.
Credit unions (NCUA insured) are lumped indeed with banks (FDIC insured) as far as insured deposits are concerned. Both FDIC and NCUA are federal agencies, while the SIPC for brokerage insurance is not (it is a nonprofit under federal "supervision"). Most of the discussions here are for easily available brokered CDs that are from banks, not those obtained locally at banks or credit unions. FWIW, my main checking a/c is at a local/regional credit union but its savings and CD rates aren't anything to write home about.
I have a couple of years to figure it out. Anybody else actually completed the process?
With so little cash it’s not worth my time and effort seeking out the best return. Fido’s SPAXX.works for me - being essentially a store of “dry powder” in case bargains appear. It’s been interesting, educational - and mildly amusing - watching many posters seeking-out the best rates across the banking industry or treasury market for many months now. I understand and respect their reasons, trusting that’s what works for them.
As far as RMDs are concerned, at a much earlier age I converted most of my IRA anssets into Roths. The fact that they require no RMDs was a primary reason for so doing. The remaining smaller traditional IRA requires RMDs, but I typically pull more than required from that every year anyway to supplement expenses - the Roth being reserved for larger purchases / unexpected contingencies..
https://www.fidelity.com/learning-center/personal-finance/retirement/qcds-the-basics
Click on "Make a QCD". The pop-up that appears reads:
How do you want to submit your QCD?
Online By mail using our form (PDF)
That's where I'm always at, myself, too. So, someone shows me a better CD rate, and I seethe. For a moment. Then I remember it's just not how I operate. @hank