Can RMD Be Taken in Stock?

This guide answers whether can rmd be taken in stock, explaining RMD mechanics, tax and basis effects of in‑kind distributions, eligible accounts/assets, practical steps, risks, examples, and best ...

2026-01-03 01:38:00

By Emma Shah

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Can RMD Be Taken in Stock?

As a straightforward answer to the central question — can rmd be taken in stock — the short response is: yes, in many cases a required minimum distribution (RMD) can be satisfied by taking an in‑kind distribution of publicly traded securities rather than selling them for cash. This guide explains how in‑kind RMDs work, the tax consequences and basis rules, what accounts and assets permit such transfers, the practical steps to execute an in‑kind RMD, typical benefits and risks, and best practices for coordination with custodians and tax advisors. Read on to learn what to check early in the year, how to document the transfer, and when alternatives like Qualified Charitable Distributions (QCDs) may be preferable.

As of 2024-06-01, according to IRS Publication 590-B, RMDs are required withdrawals from some tax‑deferred retirement accounts once the account owner reaches the IRS‑specified distribution age. This guide synthesizes IRS guidance and practical industry practices to help you answer whether can rmd be taken in stock for your situation.

Overview of RMDs and In‑Kind Distributions

Required minimum distributions (RMDs) exist to ensure that tax‑deferred retirement savings are eventually recognized as taxable income. The RMD amount for each retirement account is calculated annually by dividing the account’s prior‑year December 31 balance by an IRS life‑expectancy factor (the Uniform Lifetime Table, Joint Life and Last Survivor Table, or single life table for beneficiaries, depending on circumstances).

RMD timing and purpose

RMDs are based on the retirement account balance as of the prior calendar year’s December 31. The distribution amount must be withdrawn by the end of the current distribution year (generally December 31) unless specific first‑year rules apply.
The primary purpose is tax recognition: amounts contributed pre‑tax grew tax deferred; the RMD converts some of that deferred balance into taxable income.

What is an in‑kind distribution?

An in‑kind distribution transfers securities (for example, shares of publicly traded stock, ETFs, or mutual fund shares) from a retirement account directly into a taxable brokerage account without first liquidating them for cash inside the retirement account. Instead of selling and generating cash inside the IRA or plan, the custodial account wires or transfers the actual securities to a taxable account.

Can an in‑kind transfer satisfy an RMD?

Yes — for many IRAs and some employer plans, an in‑kind transfer of securities with a fair market value equal to the RMD amount on the distribution date will satisfy the RMD requirement. That addresses the question: can rmd be taken in stock — it can, subject to custodian and plan rules, valuation requirements, and timely execution.

Tax Treatment and Basis Consequences

Taxation of the distribution

The full fair market value (FMV) of the securities on the date of distribution is treated as ordinary income for the RMD year. Whether you receive cash or stock, the distribution’s taxable amount is the FMV at distribution and is reported on Form 1099‑R.
Taking the RMD in stock does not change the fact that the distribution is taxable as ordinary income for that tax year.

Cost basis (basis reset) in a taxable account

When securities are distributed in‑kind, the fair market value on the distribution date becomes your cost basis in the taxable account. That value is typically what the custodian reports on Form 1099‑R as the gross distribution amount.
From that point, any future appreciation (or decline) in value is treated like any other taxable investment: gains above the new basis are taxed as capital gains when realized, with long‑term vs short‑term treatment determined by your holding period in the taxable account (holding period starts at transfer).

No tax avoidance and no double taxation

Taking an RMD in stock does not avoid ordinary income tax on the RMD amount; you owe tax on the FMV at the time of distribution.
There is no “double taxation” if you later sell the distributed securities. You already recognized the FMV as ordinary income at distribution; any later sale is taxed only on gains or losses relative to the new basis.

Reporting and documentation

The custodian will issue Form 1099‑R for the RMD showing the distribution amount. The cost basis report from the receiving brokerage should match the FMV reported on Form 1099‑R. Good recordkeeping ensures matching when you eventually sell the shares and report capital gains or losses.

Accounts and Assets Eligible for In‑Kind RMDs

IRAs (Traditional IRAs)

Traditional IRAs commonly allow in‑kind distributions for publicly traded securities. Many custodians offer a built‑in process to transfer equities or mutual fund shares to a taxable account held at the same institution or to an external brokerage.
Roth IRAs: For IRA owners during life, Roth IRAs generally do not require RMDs, so the in‑kind RMD question is not applicable to owner Roth IRAs. Inherited Roth IRAs follow different distribution rules.

Employer plans (401(k), 403(b), etc.)

Whether can rmd be taken in stock for employer plans often depends on the specific plan document and the plan administrator’s operational capabilities. Many employer plans do not permit the in‑kind transfer of securities because plan assets are often held in collective structures or the plan sponsor limits distribution options.
If you are a plan participant approaching RMD age, check with the plan administrator early to confirm whether in‑kind distributions are permitted and, if so, the mechanics and any fees.

Assets typically eligible

Publicly traded stocks, exchange‑traded funds (ETFs), and many mutual funds that the custodian holds are the simplest assets to transfer in‑kind.
Assets that are illiquid, privately held, or hard to value (private equity, closely held business interests, certain alternative investments, or nontransferable fund shares) may not be eligible for in‑kind transfer. Custodians may require liquidation or provide a cash distribution instead.

Special note on crypto and digital assets

If your IRA custodian holds crypto or tokenized securities, in‑kind transfers of those assets are subject to the custodian’s operational capabilities and applicable tax/reporting rules. If you plan to move tokenized assets from an IRA to a taxable wallet (for example, to a Bitget Wallet), confirm the custodian’s rules, valuation methodology, and whether the plan permits crypto in‑kind distributions.

Reasons People Take RMDs in Stock (Potential Benefits)

Maintain market exposure

If the distributed security is expected to rebound, transferring shares in‑kind preserves market exposure rather than locking in a realized loss by selling inside the retirement account.

Potential tax efficiency on future appreciation

Once securities are in a taxable account with a cost basis equal to the distribution FMV, any future price appreciation will be taxed as capital gains when realized, potentially at lower long‑term rates versus ordinary income rates. For appreciated positions transferred in‑kind, the immediate income tax is already triggered by the RMD; only post‑distribution appreciation becomes a capital gain.

Lower transaction costs and fewer market timing risks

Avoiding a sale in the retirement account and a separate repurchase in a taxable account reduces commissions, bid‑ask spreads, and timing risk. This is helpful when you intend to continue owning the same security outside the retirement account.

Portfolio management and concentration handling

In‑kind RMDs allow you to move a concentrated position to a taxable account where you can execute tax‑loss harvesting strategies, place limit orders, or apply different trading rules that might not be available inside the retirement plan.

Drawbacks and Risks

You still owe income tax in cash

The major practical downside is that taxes on the RMD must be paid out of non‑IRA funds. If you take the RMD in stock, you will still owe ordinary income tax on the FMV of the distributed securities that year. If you lack outside cash to pay the tax, you may need to sell some of the distributed securities — potentially precipitating the market timing you hoped to avoid.

Valuation and timing risk

Market prices change. If you instruct a transfer expecting the security’s value to equal your RMD amount, price movement between instruction and settlement can create a shortfall. A distribution that settles at a lower FMV than required leaves an unmet RMD portion, which can trigger the 50% excise tax on the amount not distributed as required.

Custodian and plan restrictions

Some custodians or employer plans do not permit in‑kind distributions or impose processing delays and fees that make in‑kind transfers impractical late in the year. If the plan allows in‑kind transfers but imposes a long lead time, waiting until December risks incomplete transfers or unwanted tax consequences.

Recordkeeping complexity

Properly documenting the FMV reported on Form 1099‑R and ensuring the taxable brokerage records the same cost basis is crucial. Mismatches cause headaches when you sell and file taxes.

Potential wash sale and tax planning interactions

If you take an in‑kind distribution and then sell and repurchase similar securities, watch wash‑sale rules and timing for tax‑loss harvesting. Although a distribution is not a purchase, subsequent trades may interact with wash sale rules.

How an In‑Kind RMD Is Executed (Practical Steps)

Calculate your RMD

Determine the prior‑year December 31 balance for each retirement account subject to RMDs. Divide that balance by the IRS life‑expectancy factor appropriate for your situation. Many custodians provide RMD calculators; you may also consult IRS Publication 590‑B.

Confirm custodian and plan rules early

Ask your IRA custodian or plan administrator well before year‑end whether they permit in‑kind distributions, what assets are eligible, lead times, transfer forms, and fees. If you plan to transfer to a taxable account at the same custodian, the process is usually faster.

Instruct the custodian to transfer securities equal to the RMD value

Provide written instructions specifying which securities and the target taxable account. If you hold the taxable account with the same custodian, note the account number to speed processing.

Verify the distribution amount at settlement

After transfer, confirm the actual FMV used for the distribution. The custodian will report the distribution amount on Form 1099‑R for the RMD year. Compare this to the basis the receiving brokerage records and correct any discrepancies promptly.

Fund the tax liability from non‑retirement sources

Plan to pay the income tax from cash outside the retirement account. If you need to sell part of the distributed securities to pay the tax, do so with awareness of timing, possible capital gains consequences, and any wash sale concerns.

Keep documentation

Retain copies of distribution instructions, custodian confirmations, Form 1099‑R, and the taxable brokerage basis statement. These documents support accurate tax reporting when you later sell the securities.

Make up any shortfalls immediately

If the in‑kind transfer settles for less than the RMD, promptly transfer additional cash or securities to meet the RMD. Failure to make up the shortfall risks the excise tax on missed RMD amounts.

Examples (Illustrative Scenarios)

Example 1 — Simple in‑kind RMD that meets requirement

Situation: On December 31, your traditional IRA balance is $1,000,000 and your IRS distribution factor produces a $50,000 RMD for the year.
Action: You instruct your custodian to transfer 1,000 shares of XYZ Corp from your IRA to your taxable brokerage. On the distribution date, XYZ’s FMV is $50.00 per share; 1,000 shares = $50,000.
Tax effect: You must include $50,000 as ordinary income on your tax return for the RMD year. Form 1099‑R will report $50,000. Your cost basis in the taxable account for the 1,000 shares is $50.00 per share. Future appreciation above $50.00 per share will be taxed as capital gains when realized.

Example 2 — Shortfall due to price movement

Situation: Same RMD ($50,000). You request the custodian to transfer 1,000 shares of XYZ at $50.00 per share on December 30. The transfer settles on December 31 at $47.00 per share due to a late‑day price drop; the transferred value is $47,000.
Required action: You need to provide an additional $3,000 in cash or securities to meet the $50,000 RMD. If you fail to cover the $3,000 shortfall by year‑end (or the custodian’s deadline), you risk the excise tax of 50% on the unmet amount until corrected or a reasonable cause is accepted by the IRS.

Example 3 — Long‑term tax difference after sale

Situation: You received 1,000 shares with basis $50 per share as the in‑kind RMD. Years later you sell 1,000 shares at $80 per share.
Tax effect: You already recognized $50,000 of ordinary income at distribution. At sale, your capital gain is ($80 − $50) × 1,000 = $30,000. That $30,000 is subject to capital gains tax (short‑term or long‑term depending on holding period in the taxable account).

Interaction with Other RMD Strategies

Qualified Charitable Distributions (QCDs)

A QCD allows IRA owners aged 70½ or older (check current IRS age thresholds) to transfer up to annual limits directly from an IRA to a qualified charity, counting toward the RMD while excluding the distributed amount from taxable income. This can be preferable if you want to satisfy part of an RMD without increasing taxable income.
QCDs must be direct trustee‑to‑charity transfers and cannot be taken in‑kind to your taxable account. If charitable giving is your goal, a QCD may be a better tool than an in‑kind transfer to a taxable brokerage.

Roth conversions and timing

Converting pre‑tax retirement assets to a Roth IRA prior to RMD age can change future RMD calculations and tax timing. Roth conversions are taxable in the year of conversion but can reduce future RMD amounts (Roth IRAs are generally not subject to owner RMDs during life).
Note: You cannot convert amounts already required as RMDs in the same year; RMD amounts must be distributed first.

Liquidity and rebalancing planning

If you plan to take in‑kind RMDs regularly, keep a cash buffer in your non‑retirement accounts to pay taxes without forced sales. Coordinate rebalancing and tax planning early in the year to avoid late‑year execution risks.

Custodian, Regulatory and Practical Considerations

Check permit and timelines early

Confirm whether your custodian or plan administrator permits in‑kind distributions and ask about required forms, lead times, and any cutoffs. Do not wait until December to request complex transfers.

Fees and settlement times

Some custodians charge processing fees for in‑kind transfers or for transferring securities between institutions. Settlement times vary; same‑custodian transfers are usually fastest.

Form 1099‑R and basis reporting

After an in‑kind RMD, ensure the Form 1099‑R shows the FMV and that the receiving brokerage records the same amount as the cost basis. Request corrections immediately if they do not match.

Coordination with advisors

For inherited IRAs, concentrated positions, illiquid assets, or complex estates, coordinate with a tax advisor and custodian. The rules for beneficiaries, especially post‑SECURE Act changes, can be intricate.

Securities transfer instructions

Specify whether the transfer is to a taxable account in your name or a joint account, and whether the transferred shares should be kept or liquidated. Miscommunication can lead to unplanned sales and tax consequences.

Frequently Asked Questions

Q: Is taking an RMD in stock allowed?

A: Yes, in many IRAs and some employer plans an RMD can be satisfied by an in‑kind transfer of publicly traded securities. Whether can rmd be taken in stock depends on custodian and plan rules; check early with the custodian or plan administrator.

Q: Does taking an RMD in stock reduce taxes?

A: No. The taxable event is the fair market value of the distributed securities on the distribution date, which is treated as ordinary income for the RMD year. Taking the RMD in stock only changes the form of the distribution (securities instead of cash); it does not eliminate the income tax on the RMD.

Q: How is basis determined after an in‑kind RMD?

A: The cost basis in the taxable account equals the fair market value of the securities on the distribution date, generally the amount reported on Form 1099‑R. Future gains or losses are measured relative to that basis.

Q: What if the transfer value is less than the RMD amount?

A: You must make up the shortfall with additional cash or securities to meet the RMD. Failure to satisfy the RMD can result in a 50% excise tax on the amount not distributed (subject to obtaining a waiver or correction under IRS guidance).

Q: Are company stock or concentrated holdings treated differently?

A: Publicly traded company stock held in your IRA can often be transferred in‑kind, but large concentrated positions may raise additional planning questions (tax diversification, sale timing, and net‑investment income considerations). Coordinate with a tax advisor if you plan to transfer concentrated positions as RMDs.

Best Practices and Recommendations

Confirm permission and process early

Contact your IRA custodian or plan administrator at the start of the year to confirm whether they permit in‑kind RMDs, what assets are eligible, the required paperwork, fees, and expected timelines.

Keep cash on hand for taxes

Maintain liquid cash outside retirement accounts to pay the ordinary income tax on the RMD. Relying on selling the distributed securities to fund taxes risks market timing and potential extra tax consequences.

Document everything and reconcile forms

Keep copies of transfer instructions, custodian confirmations, the 1099‑R, and the receiving brokerage’s basis statement. Reconcile the reported distribution value on Form 1099‑R with the basis recorded by the receiving account.

Use same‑custodian transfers when possible

If you hold a taxable account at the same institution as the IRA, transferring in‑kind to that taxable account can simplify processing and reduce settlement delays.

Seek professional advice for complex situations

Inherited IRAs, illiquid assets, employer plan restrictions, large concentrated positions, or cross‑border tax issues warrant consultation with a tax professional or financial planner.

Consider charitable alternatives

If your aim is to reduce taxable income from RMDs, explore Qualified Charitable Distributions (QCDs) where eligible — these satisfy RMDs and may exclude the distributed amount from taxable income when the transfer meets QCD rules.

Plan transfers well before year‑end

Avoid last‑minute instructions in December. Transfers can take several business days or longer; price volatility can create shortfalls if transfers are delayed or settle at different values than expected.

If crypto/digital assets are involved, confirm custody and reporting

For IRAs holding tokenized assets, coordinate among the IRA custodian, the receiving wallet (for example, Bitget Wallet if you are moving distributed crypto into a self‑custody or exchange wallet), and your tax advisor to ensure correct valuation and reporting.

Custodian Checklists and Sample Transfer Workflow

Checklist to confirm before requesting an in‑kind RMD:

Does the custodian permit in‑kind distributions for the specific security?
Is the receiving taxable account at the same custodian or an external broker? Provide receiving account details.
What forms are required and what is the cutoff date for processing to meet year‑end rules?
What fees and settlement times should you expect?
How will the custodian compute and report the fair market value for the distribution (to be reported on Form 1099‑R)?

Sample workflow for an IRA owner planning an in‑kind RMD:

January–September: Determine RMD estimates; discuss plan with custodian and tax advisor.
October: Decide which securities to transfer in‑kind and ensure the receiving taxable account is ready.
Early November: Submit formal in‑kind distribution request to custodian with clear instructions.
Mid–November to December: Monitor transfer; confirm FMV and Form 1099‑R reporting expectations.
By year‑end: Confirm all required amounts were distributed; if short, provide additional transfers immediately.
January–February (following year): Receive and reconcile Form 1099‑R and cost basis statements; prepare for tax filing.

References and Further Reading

IRS Publication 590‑B (discusses RMD rules and distribution tables).
Custodial provider publications and investor education pages (check your custodian’s guidance on in‑kind transfers and Form 1099‑R reporting).
Practitioner articles from financial publications that describe in‑kind RMD practicalities and examples.

As of 2024-06-01, according to IRS Publication 590‑B and standard custodian guidance, RMDs are calculated using prior‑year December 31 balances and IRS life‑expectancy factors; the distribution amount is taxable as ordinary income in the year distributed.

Final Notes and Next Steps

If you still wonder whether can rmd be taken in stock for your accounts, start by contacting your IRA custodian or plan administrator now to confirm whether they permit in‑kind distributions and to request their procedures and deadlines. Keep liquid funds available to cover the tax liability, document the transfer and the FMV reported on Form 1099‑R, and coordinate with a tax advisor for complex or large transactions.

For IRA holders with crypto or tokenized assets, verify custody and transfer rules carefully; if you plan to house distributed digital assets in an exchange or wallet, consider Bitget Wallet for secure custody and Bitget services for execution needs. Learn more about Bitget Wallet’s support and how custodial procedures interact with digital asset transfers.

Explore more Bitget resources to understand custody and operational options for digital assets and keep compliance with IRS reporting requirements in mind when you plan in‑kind RMDs.