I know I can put a 2020 Required Minimum Distribution (RMD) back into my Individual Retirement Account. But what if I took securities? I took my 2020 RMD in January. As soon as I had it transferred to my regular brokerage account, its value plummeted. I'd like to return the same shares I took, and then, after returning them, I'd like to withdraw the number of shares whose value is my annual RMD. That's allowed, right?

Yes, it is.

When you withdraw the shares from the IRA you'll pay ordinary income tax on their current depressed value. And any future increase in their value inside your brokerage account will be taxable at a potentially lower capital gains rate when you eventually sell them.

People who took a 2020 RMD have until Aug. 31 to cancel it by returning the distribution to their retirement accounts. If your RMD was $2,000 and you took it as 100 shares of stock worth $2,000, you must return 100 shares — even if they're now worth more or less than $2,000. By returning the stock to your IRA, you cancel the RMD and avoid the tax on it. You report the return of those shares on your 2020 tax return as a regular tax-free rollover.

If you then decide to withdraw shares again, no problem. You're always free to take distributions from your IRA.

You'll be taxed on the market value of the stock at the time you withdraw it. If you withdraw 20 shares worth $50 a share from your IRA, for example, your taxable withdrawal is $1,000. That $1,000 is added to your taxable income for the year.

The bottom line

When you withdraw stock from your IRA, you're taxed on its current market value even if you don't sell the stock.

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