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How can I take my RMD if my account holds illiquid investments?

Some IRA assets are much harder to liquidate; distributing the RMD in shares of the investment may also be complicated or not possible. Despite these issues, there is no IRS exception to the RMD requirements for illiquid assets. Consider these possible solutions:

  1. Take from one account: RMD rules allow you to aggregate (or combine) your RMDs from your IRAs and take the total amount from one account. So, if you have more than one IRA, you can calculate the RMD amount for each IRA and add them together. If you have one IRA that is illiquid, you could simply take the RMD for that account from another IRA. Remember, there are limits here. You cannot satisfy your RMD for your IRA from a workplace plan or a Roth IRA. Note: You cannot combine your owned IRAs with those of your spouse or with IRAs that you have inherited.
  2. Take an in-kind distribution: For many asset types, it is possible to take a distribution of part or all shares to satisfy your RMD.  If an in-kind distribution is requested for an asset that is currently titled in the name of your IRA, all or a portion of the asset will be retitled in your individual name and distributed from the IRA. 
  3. Add a cash contribution:  If you are eligible to make an IRA contribution for the current tax year, you may be able to contribute cash to your IRA and use available cash in the account to satisfy your RMD. Annual contribution limits and earned income requirements apply 

To avoid last-minute mistakes and stiff IRS penalties, it is important to plan ahead. Talk to your financial advisor or tax attorney to understand how to fulfill your RMD requirements and what is best for your situation.

 To request a distribution from an inherited IRA, submit STRATA's IRA Distribution Request form.