retirement

9 common misconceptions about IRAs

You must withdraw cash
You must withdraw cash © puchan/Shutterstock.com

Traditional IRAs require investors to take a minimum distribution every year after age 70 1/2. That can be done by taking cash out of the account, which could require selling an investment. But that's not the only way to take the required minimum distribution, or RMD.

"Most advisers ignore the option to fulfill RMDs using in-kind security transfers rather than moving cash," says Lina. That means you could move a stock or mutual fund or other type of investment out of the IRA and into a taxable account.

"This has several clear benefits: no transaction costs required to raise cash; no trading required to rebalance portfolio following the RMD; and it psychologically separates the required distribution for tax purposes from the need to spend the RMD amount," Lina says.

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