I have the following question from a client who will begin his MRDs in a couple of years. "Can mandatory IRA withdrawals be made by transferring an asset(s) from an IRA brokerage account to a non-IRA account within the same firm, or must withdrawals be made only in cash? Assuming the asset itself can be transferred between accounts, how would one value a CD with a future maturity date for which there is no active secondary market? Would equities or mutual funds be valued at their closing price on the day of transfer, or on some other basis?"

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Yes, this is a distibution in-kind. A mutual fund would be valued at the close of the day as with any mutual fund transaction. A value to equities would be determined on the day of transfer, and since the value would fluctuate, care that at least the RMD is distributed is needed. How a CD is handled will depend on the policies of the IRA custodian, and any leverage wielded by the client due to size of assets and possible transfer elsewhere. The CD should be valued with interest earned up to time of transfer. Whether early withdrawal penalties are subtracted resulting in a lower value, and terms of the new taxable CD all depend on the financial firm.

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