RMDs and Permanent Portfolio

[MarySB]

I have been using the PP asset allocation for a little over a year now and, after a couple of nail-biting weeks, have been very happy with the results.

In five years, however, I will need to begin taking RMDs.

I have used my IRAs for the gold, bond, and stock allocations. But, my cash allocation is in an annuity I bought years ago. I understand that the ideal way to redeem cash in PP is to use the cash portion and rebalance, as needed. That is not possible with my present setup.

Because of my present setup, I need advice on how to proceed. The fact that I have five years before the RMDs kick in, I can juggle things around if I need to.

So, I am looking for some words of wisdom. Thank you.

[MediumTex]

Just take your RMD and whatever asset it was in before the RMD, put it back in that asset (minus the tax withholding) after the RMD.

Simple.

[MarySB]

Thank you, MT. It does seem simple enough.

I need to look at the tax implications, as well, since I will be putting it back into a taxable account, right? This assumes that I cannot put it into a Roth, of course. So, do I need to take from stocks first, then bonds, then gold? Rebalance, as needed?

Thanks.

[MediumTex]

Thank you, MT. It does seem simple enough.

I need to look at the tax implications, as well, since I will be putting it back into a taxable account, right? This assumes that I cannot put it into a Roth, of course. So, do I need to take from stocks first, then bonds, then gold? Rebalance, as needed?

Thanks.

Typically, your RMDs are going to be coming out as cash, so once they are in a taxable account just put them wherever they need to go to round out your allocation properly. 

My mother is receiving RMDs from her IRA and she uses the PP strategy.  I've got it set up so that the RMDs will have little to no effect on anything (other than accounting for the reduced portfolio value following the tax withholding on the RMDs).  I just keep plenty of the cash allocation inside the IRA so that RMDs don't require that any of the other PP assets be liquidated in order to accomodate the RMD.

As you grow older this issue probably becomes more challenging as the RMDs begin to represent larger and larger chunks of your tax-deferred accounts, but it's still not a big deal.  If, for example, you have to take LT bond exposure from your tax deferred accounts, just buy some long bonds in your taxable accounts.  It's less tax-efficient, but you have to deal with what you've got.