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Old 11-13-2016, 12:29 PM
Location: Charleston, SC
1,362 posts, read 764,777 times
Reputation: 2428


I'm thinking ahead to the time when RMD's will begin, about 2 years from now. I'm looking at local bank high yield checking account options. I always see requirements for Direct Deposit, and also for 10 Debit Card Transactions per month.

I know we can meet the Direct Deposit Reqt with a monthly RMD transfer. But I just don't see myself using the Debit Card that much.

General Question -- How do you folks manage your RMD deposits ?? Once per year ? Quarterly ? Monthly ? Deposit into the House Checking to pay bills ?? Into an Interim High Yield Savings Account ??

Specific Question -- Are there really 10 Debit Card transactions in a typical month ?? I've got a good deal on a Cash Back Credit Card, and I pay the bill in full each month. How is immediate debit to my checking account better than a 45-day interest free loan (with 5% cash back to boot) ??

Interested to hear about how others manage this......
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Old 11-13-2016, 01:42 PM
Location: OH>IL>CO>CT
5,225 posts, read 8,384,895 times
Reputation: 7180
I transfer the RMD money into a "cash" account with the same custodian as the IRA it is coming out of.

They can be setup with check writing and/or ATM/Debit cards, if needed
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Old 11-13-2016, 01:47 PM
1,226 posts, read 1,258,081 times
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I don't have RMD yet but I do have pension and annuity money and this is how we do it:

We have a non-interest bearing checking account. It has no requirement for number of transactions or debit card use. All money is transferred into and and out of this account by ACH transfer. Thus I call it my "transfer account".

From the "transfer account" I immediately transfer the necessary money into our joint checking account to cover the monthly bills. The joint account earns a penny a month in interest and has no requirements for number of checks or debit card use. At the end of the month, if I have kept accurate records, the amount in the joint account should be $1 to keep it open.

Excess money is transferred into "savings vehicles" (i.e. CD's, brokerage accounts, MYGA, etc). Money can flow into these "savings vehicles" from the "transfer account" but money cannot be transferred between "savings vehicle" accounts as they are not linked.

All money must flow into and out of the "transfer account". I do this as a safety precaution so that no savings account knows about any other account.

Generally I keep $100 in the "transfer account" to keep it open. This way if anyone tries to hack into my account they are limited in what they can take.
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Old 11-13-2016, 02:31 PM
Location: Charleston, SC
1,362 posts, read 764,777 times
Reputation: 2428
LookingatFL --
So your's is a 3-step process, right ??
As I think more about it -- there's not a lot of interest to be gained by the "Transfer Acct" or "Interim Savings Acct" as I was calling it. The rates they are paying are a paltry 0.4% at best. I can get 0.35% at Navy FCU on up to $9,999 min balance or 0.4% on $10K balance.

The regular "household" checking acct probably pays 0.01% max. That's $40 per year vs $10......hardly worth the effort.

Is there a measurable benefit to keeping the savings accts separate ??
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Old 11-13-2016, 02:49 PM
1,226 posts, read 1,258,081 times
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Yes, it is a 3 step process, but at this point it is pretty automated. I know what dates the money is being automatically deposited into the "transfer account" and the transfer account is set up to automatically transfer fixed amounts of money between the accounts. If I want to change something, I go into the account and make the changes manually.

The only benefit is that they do different things. For instance, the CD's can't be added to and are part of my ladder. The MYGA also can't be added to and is part of the ladder. When I transfer to a CD or a MYGA I am actually opening a new account. When I transfer to a brokerage account I am moving money into a mutual fund. I have different mutual funds based upon the type of fund I want to invest in. I also have savings accounts which I transfer money into monthly for large expenses that I know are coming up during the year (i.e. a savings account for property tax, a savings account for my life insurance premium, a savings account for emergency fund)

Just as an aside, you can look at bankrate.com to find better internet banking rates than you will get at the FCU or local bank. Usually I will read reviews of the bank before putting money into it.
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Old 11-13-2016, 03:29 PM
Location: Charleston, SC
1,362 posts, read 764,777 times
Reputation: 2428
FL --
I was looking at bankrate this morning.....that's when I stated seeing all the Debit Card required transactions. That just doesn't work for me.

I have a good CD Ladder started at Navy FCU, right now at a rolling 12 months. NAVY also ha a MYGA program, and a high-yield checking account to use as a "transfer" fund. This may be the direction I'm leaning towards in the long run.
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Old 11-13-2016, 03:48 PM
Location: Ypsilanti, MI
2,430 posts, read 3,657,283 times
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LookingatFL; love your plan! I am a decade away from the magic age requiring RMDs but had made a mental note to investigate doing the same as you, even before reading your post.
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Old 11-13-2016, 04:02 PM
Location: Florida
4,354 posts, read 3,689,532 times
Reputation: 4074
I would avoid any checking account charges so I agree with you there.

If you will be spending the money I would have then send it to your current checking account monthly.

If you have a large bill, say real estate taxes or insurance, you could have it sent annually the month before the bills are due.

If you are not going to need the money I would look for an online bank. Send money annually and buy a CD.
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Old 11-13-2016, 08:47 PM
Location: Florida
5,226 posts, read 3,005,081 times
Reputation: 9580
Before RMD kicked in I moved my IRA money into regular mutual funds in small increments over several years and was able to avoid any taxes or penalties.

I don't have a lot, but that is another story.
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Old 11-13-2016, 09:15 PM
1,200 posts, read 704,872 times
Reputation: 2117
I opened a savings account for RMD deposits at the same bank that has my checking. Only the checking account has a debt card. I take the RMD late in the year and try to pick a time when the market is up. I can transfer money between accounts online If I want to use some of the RMD money. There is no minimum debt card transaction requirement or any monthly fees at the balances maintained. We only use the debt/atm card to get pocket money at the bank branch ATM, 3 miles away.
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