If there were any flows in or out such as rmd's how exactly did you account for those flows?
!st some background:
I do not do estimated taxes (never did, see below*). My RMDs consist of 2 parts: federal & State tax withholding (almost all of the value of my RMDs) and the rest transferred to taxable brokerage accounts where they are invested. My RMD's come from a maturing IBonds ETF; I ladder them many years out and each one matures in December where they liquidate and distribute proceeds that are used for that year's RMD's.
My investments consist of 1/3 401K (requiring RMD's) 1/3 Roths (regular ad back door) and 1/3 taxable. There are no bonds in my taxable accounts; only stocks and index funds as they have favorable tax rates as LTCG.
Other than all my F&S taxes, I am lucky to have sufficient pensions and SS and no mortgage or loans such that no other money comes out of my portfolio's.
So to answer your question: By % gain consists of (value of portfolio on Dec 31 - value on Jan 1)/Value on Jan 1. My RMD's come out in mid Dec when I have a pretty good idea of my tax liabilities so technically the gain I posted is understated.
* IMHO, never do estimated if you can avoid it:
When I was a principal in my company (and accounting did whatever I told them — always legal) what I would do is withhold $0 for taxes (couldn't do anything about FICA) until the fall when I guessed on my tax liability. I would figure out my tax liability divided by the # of weeks were left when if I withheld 100% of my salary I would meet it (FICA was gone by then and I already w/h max to my 401K). I belived in getting my $ into my 401K as early in year as possible so that they were invested as early as possible.
When I retired and before 70 1/2 I did the same with withholding on my pensions, i.e., changed withholding to 100% toward the end of the year and 0% prior.
With my RMD's after I hit 70 1/2 — explained above.
The problem with RMD's, IMHO, is if you make a mistake there are penalties. I define mistakes as either being late on a payment or under estimating or over over estimating (and hence the penalty is giving gov't a interest free loan. PS. I am pissed when I get a tax refund when I file in April as that means I miscalculated and loaned the Gov't money interest free. I could never understand why people intentionally over withhold so they get a large refund instead of just withholding correctly and having some sort of automatic savings account for the same amount being over withheld.
These schemes have been done by me for 40 years w/o incident from tax agencies. It seems under the rules that money withheld this way is presumed by the IRS as being w/h evenly through out the year even though income (say a big stock gain or a bonus at being of the year), is not.
Seems like a lot of work but actually maybe a couple of hours per year, perhaps even less time than doing estimated.
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