I'm helping my MIL with her finances and working through her AA and the mechanics of where the assets should go. She has no Roth accounts, just her after-tax accounts and a traditional IRA. She's 73, so she's taking RMDs. 82% of her funds are on the IRA side of the fence now. I'm struggling with where to put her "cash" (right now it looks like it'll be CDs at Ally Bank). The cash portion of her portfolio will be about 18%, these are taking the "normal" place of most of the bonds I'd normally recommend that she include (bonds just seem risky due to possibly higher rates, I'm not seeing much reward for that).
Would it be best to keep these CDs outside her IRA, or put them in there? What I've thought:
- The CD's are likely to grow less than the equities, let the equities stay in the IRA and grow tax free.
- She has to take her RMD from the IRA every year. If the market goes down and if she's got CD's in the IRA, she'd be able to sell those to meet the RMD rather than sell stock that is at a beaten-down share price.
- Putting equities outside the IRA would give the opportunity to do tax loss harvesting (if necessary), which can't be done in an IRA.
- Right now I'm leaning toward keeping the CD's out of the IRA. If she has to sell depreciated equities to meet her RMD, we can just sell a corresponding amount in CDs and replace the equities (or buy similar ones) in the after-tax account.
I know this is Retirement 101, so just point me to a good source of info and I'll go read it!
Would it be best to keep these CDs outside her IRA, or put them in there? What I've thought:
- The CD's are likely to grow less than the equities, let the equities stay in the IRA and grow tax free.
- She has to take her RMD from the IRA every year. If the market goes down and if she's got CD's in the IRA, she'd be able to sell those to meet the RMD rather than sell stock that is at a beaten-down share price.
- Putting equities outside the IRA would give the opportunity to do tax loss harvesting (if necessary), which can't be done in an IRA.
- Right now I'm leaning toward keeping the CD's out of the IRA. If she has to sell depreciated equities to meet her RMD, we can just sell a corresponding amount in CDs and replace the equities (or buy similar ones) in the after-tax account.
I know this is Retirement 101, so just point me to a good source of info and I'll go read it!