Q. I will turn 70 1/2 in 2016 and will begin Required Minimum Distributions (RMDs) from my IRA, which is in various stocks, mutual funds and CD’s. Can I take a stock from my IRA without cashing it in and pay tax on the value while keeping the money invested in the stock? Or must I sell the stock?
— Cashing in

A. You’ve got options.

You don’t have to sell the stock to satisfy the RMD, said Robert Dowling, a certified financial planner with Modera Wealth Management in Westwood.

Instead, you can transfer the stock “in-kind” to your taxable account.

“She will have to satisfy the taxes from the IRA but is allowed to transfer the stock,” Dowling said. “If the investor employs this strategy, the stock now has a new cost basis — based on the value at the time of the `in-kind’ transfer — and any future sales would be a capital gain.”

Dowling said before you make a move, you should consider the type of investment that you want to transfer because some investments are best kept in a tax-deferred account.

For example, he said, if you transfer a stock that pays high dividends, the distributions will be taxed at ordinary tax rates. But if the investment transferred “in-kind” is growth-oriented with little or no dividends or capital gain distributions, then the ordinary tax consideration is less of an issue.

Also note that if you transfer the stock “in-kind,” you would not pay a transaction cost for the trade(s).

Dowling says you should also consider the volatility of the investment you want to transfer. That’s because when the investment is in the transfer process, the investment is subject to the movements in the market, he said. Depending on when the transfer occurs, the value could be more or less than what you thought.

“I would recommend asking the custodian how long the transfer will take in order to mitigate the risk that the RMD is less than what is required,” Dowling said. “There is a 50 percent penalty on the amount of the RMD not satisfied.”

It’s also important to make sure you understand other RMD rules.

You said you turn 70½ in 2016. By waiting until then and depending upon the date of your actual birthday, you may be required to take two distributions in the same year, said Vince Pallitto, a certified financial planner and certified public accountant with Summit Asset Management in Florham Park.

You didn’t say what your income level was, but that move could push you into a higher tax bracket or make more of your Social Security subject to tax, Pallitto said.

Also, if you’re subject to the Alternative Minimum Tax in 2015, you could take a 2015 distribution with a minimal tax increase, Pallitto said.

Lastly, Pallitto said, there could be an issue with estate planning.

“Depending on the size of the account and other assets, it may be wise to plan around the federal exemption, or at least the $675,000 New Jersey exemption,” Pallitto said.

Email your questions to Ask@NJMoneyHelp

Karin Price Mueller writes the Bamboozled column for The Star-Ledger and she’s the founder of NJMoneyHelp.com. Click here to sign up for the NJMoneyHelp.com weekly e-newsletter. Like NJMoneyHelp.com on Facebook and follow it on Twitter.