@Hol67 wrote:
Sorry I forgot one more question about the RMD. Is it income that I have to pay capital gains tax on?
No.
Do you understand the reason for the RMD? The IRS or Congress does not want people to be able to amass large tax-deferred accounts and pass them down to their families without ever paying tax. The RMD requirement is that the owner (after a certain age) must withdraw at least that much money, based on the account balance and their life expectancy, so that someone eventually pays income tax on the account. In some cases, the RMD requirement passes down to the beneficiary even if the beneficiary is not yet 72-1/2. You can always withdraw more, if you want to spend the money on something, but you must withdraw at least that much.
That being said, all withdrawals from a qualified account like an IRA are considered ordinary income. You don't track what happens inside the account, as to whether the growth is due to price appreciation, dividends or interest. You just pay ordinary income tax on whatever comes out. That's a trade-off for the tax-deferred growth.
You could, if you wanted to, withdraw all the money and invest it with a regular stock broker. You pay all the income tax now, and in the future you would pay taxes yearly on the interest and dividends, but the capital gains would be taxed at a lower rate whenever you sell the shares. It's a complicated math question that would be more appropriate for a professional financial planner.
