inherited IRA(non-spousal) options

[meierlde]

Quote:

Originally Posted by Samuel Adams If there was a local Vanguard office then we'd stick with them. I would never transfer any money on-line. If the IRS itself can be hacked, then anyone can. I too much experience with screw-ups by brokerage, annuity insurance companies, and other stuff. Wife has decided to simply transfer custodianship to local bank and put it in 1 year, 2 year and 3 year CD's. Total CD interest compared to the mutual fund dividends minus the management fees, will be pretty close to the same. And the addition of totally safe principle will be much better.

Of course you can get purchased CD's at vanguard as well, with whatever term you like. Basically when you need to redeem early you get the market price for the cd at the time. So in that case at vanguard the only fee might be the basic fee depending on the size of the account. (I suspect you can get brokered CDs at pretty much any brokerage. These CDs are fdic insured and if you have over 250k you can choose different banks and get higher limits than the 250k of FDIC insurance by using multiple banks.

[Sunset]

OP - your idea about filing taxes separately will cause you to pay in total more tax on SS than filing jointly as a married couple.

Straight from the irs site:
https://www.irs.gov/uac/newsroom/soc...and-your-taxes

"You can follow these two quick steps to see if your benefits are taxable:

• Add one-half of the Social Security benefits you received to all your other income, including tax-exempt interest. Tax-exempt interest includes interest from state and municipal bonds.
• Next, compare this total to the ‘base amount’ for your filing status. If the total is more than your base amount, then some of your benefits may be taxable.
  
  The three 2012 base amounts are:
  
  $25,000 for single, head of household, qualifying widow or widower with a dependent child or married individuals filing separately who did not live with their spouse at any time during the year;
  
  $32,000 for married couples filing jointly; and
  
  $0 for married persons filing separately who lived together at any time during the year."

[Samuel Adams]

Quote:

Originally Posted by meierlde Of course you can get purchased CD's at vanguard as well, with whatever term you like. Basically when you need to redeem early you get the market price for the cd at the time. So in that case at vanguard the only fee might be the basic fee depending on the size of the account. (I suspect you can get brokered CDs at pretty much any brokerage. These CDs are fdic insured and if you have over 250k you can choose different banks and get higher limits than the 250k of FDIC insurance by using multiple banks.

Yes I know that. I shared that with the wife. Its her inheritance. I got mine 20 years ago and made my decisions with mine. She has chosen to have it moved to her bank. She doesn't care much for Vanguard. They took a more than a year to get their act together to transfer the IRA from her father and mother into the beneficiary IRA for her and her sisters.

[Samuel Adams]

Quote:

Originally Posted by Sunset OP - your idea about filing taxes separately will cause you to pay in total more tax on SS than filing jointly as a married couple.

Thank you. We figured that one out. It was never a plan, just an option that didn't pan out. I forgot when I first looked at it that by filing separately, the greater portion of our income which is mine would suddenly be taxed not at 15% but at 25%. the only way it would work out better was if we took all of the IRA at one time. But there is no reason to do that since its not required, except to get it all out by 5 years. Going to lifetime wouldn't help either since we are up against on of the tax brackets now. So we just have to grin and bear the fact that we'll have to pay the 25% rate on the inheritance that is the IRA part.

[MooreBonds]

Quote:

Originally Posted by Samuel Adams I would never transfer any money on-line. If the IRS itself can be hacked, then anyone can. I too much experience with screw-ups by brokerage, annuity insurance companies, and other stuff.

Hmm...are you aware that every financial institution has some exposure to computer networks being "hacked"? Do you think your credit union down the block has anywhere near the level of cyber security compared to a Vanguard or any other major financial institution? And are you aware that financial fraud and theft is just about as old as.....well, money? Do you really think that identify theft/financial theft/hacking/network intrusion only came upon the scene in 1994 when the internet started to take off?

Yes, mistakes can happen in transferring accounts from one custodian to another. Just like mistakes have been happening since...oh, just about since records have started. Do you think that every hand-written digit and manually-typed digit ever made has any greater security or level of accuracy than current recordkeeping systems? If you truly fear massive screw-ups by custodians, I wonder how fearful you are of far more likely situations happening.

[Samuel Adams]

Quote:

Originally Posted by MooreBonds .........If you truly fear massive screw-ups by custodians, I wonder how fearful you are of far more likely situations happening.

I take precautions like everybody does, and then I make decisions that are appropriate for me. Yes I do think that asking the customer service manager to transfer an amount from one account to another internally in the bank with a printout after the transaction shoeing the new balance is safer that doing it online.

I don't fear massive screw-ups. I just deal with it as I do. Please don't take offense because my choices are not the same as your choices. I really do appreciate your input in this matter.

And us retired folk(with stable incomes) tend to be a little bit more concerned about maintaining principle than people who have an income that is rising, and plenty of time to recover from screw-ups.

It is just what it just is.

[Clone]

SA- The only thing that I would add to this discussion is to find somebody that understands the nuances associated with the BDA IRAs. This is an area where the big players (such as Fidelity or Vangaurd) may have an advantage.

I have a small inherited IRA at Fidelity, and it is quite easy to manage. The process of transferring it from Wells Fargo to Fidelity was straight forward- much easier than dealing with Wells Fargo. Also, I don't think anyone else has mentioned it- if you inherited two different IRAs, they must always be kept separate. You can not roll them into an existing IRA, or combine two inherited IRAs into one. There are some very specific rules about how they must be treated.

[Samuel Adams]

Quote:

Originally Posted by Clone SA- The only thing that I would add to this discussion is to find somebody that understands the nuances associated with the BDA IRAs. This is an area where the big players (such as Fidelity or Vangaurd) may have an advantage.

Our experience thus far with Vanguard has been dismal. After having been notified of the deaths and the will, it took them more than a year to break the original IRA into 3 beneficiary IRAs

12 months! Now that's service I want to keep!

[tulak]

Quote:

Originally Posted by Samuel Adams Our experience thus far with Vanguard has been dismal. After having been notified of the deaths and the will, it took them more than a year to break the original IRA into 3 beneficiary IRAs 12 months! Now that's service I want to keep!

Odd. We had an IRA split into 3 beneficiary IRAs at Vanguard and it was done quickly. My third is still at Vanguard and I've had no problems. Each year, they calculate my RMD, which I take at the beginning of the year. Sorry to hear you haven't been as lucky.

[Samuel Adams]

Quote:

Originally Posted by tulak Odd. We had an IRA split into 3 beneficiary IRAs at Vanguard and it was done quickly. My third is still at Vanguard and I've had no problems. Each year, they calculate my RMD, which I take at the beginning of the year. Sorry to hear you haven't been as lucky.

Maybe its just me....

About a decade ago, we bought a house, and needed to close down our Swiss Annuity account(no surrender fees applied) and have the money transferred back into my bank to pay for the down payment.

We had been drawing down the annuity for college educations for awhile. There was no penalty for taking out anything up to the original amount put into it, and despite their prostrations that it would grow by 6% a year it had only grown 2% in the 5 years we had it.

So we called a company called J Jurg Lattman and talked to Nicole who was our manager for this. Lattman was handling the transfer operations for La Swisse Insurance Corporation and other management for the insurance company. Nicole politely informed me that La Swisse decided they didn't want to pay Lattman anymore and would do it themselves, and gave me their number direct.

So I called them. They were friendly and asked for the wire transfer number and I gave it to them. There was dead silence. I asked them what was wrong and they said that their form only had boxes for 9 numbers---which meant that they couldn't wire anything out Europe.

For the next 6 weeks I talked with and emailed increasingly higher ups in the company until I eventually reached the president. No one could do anything. I would get these cc messages from the higher ups telling the lowers to get me off their back, but the lowers could do nothing because their form could not be changed because the computers would only recognize 9 numbers.

I thought I was going to have to fly over there.

Finally I had a bright idea. I went to my local bank branch manager and asked if they didn't have a corresponding bank in Zurich. Of course they did, and sure they could have opened an account for me in it, but that was only for million dollar plus bank deposits. But they made an exception for me, and it turned out that the corresponding bank in Zurich was literally next door to the La Swisse Insurance company. And I had my money in less than 2 days.

Funny now 9 years later. Exasperating then. Typical of dealing with banks brokerage houses, etc. If you haven't had a glitch like this yet, eventually, when you can least use it, you will.

When I tell this story in any finance discussion group like this, there is always dead silence. Nobody ever comments. I think they believe I'm making it up!

You don't want to know how my entire family shunned me and my wife and kids 21 years ago due to an inheritance that they didn't get because they were ungodly mean to the person for many years, and I was just nice to her.

So maybe these money matters only happen to me and not to other people. I've learned that for me, Murphy's Law counts. I'm so familiar with Murphy that I know him by his first name(which is Edward, BTW: google it)

[REWahoo]

Quote:

Originally Posted by Samuel Adams Typical of dealing with banks brokerage houses, etc. If you haven't had a glitch like this yet, eventually, when you can least use it, you will.

Sorry you had such a frustrating experience, but I doubt many here share your expectation of a similar experience. International banking transactions add a level of complexity and I've never seen any reason to risk having issues like you experienced by investing/insuring anywhere other than through US financial institutions.

[rodi]

Quote:

Originally Posted by Samuel Adams Our experience thus far with Vanguard has been dismal. After having been notified of the deaths and the will, it took them more than a year to break the original IRA into 3 beneficiary IRAs 12 months! Now that's service I want to keep!

I can actually believe this because my sister and I had a similar experience when my dad passed. It wasn't 12 months - but it was 4 months and required multiple copies of the certified death certificate because they kept losing the paperwork and death certificates. My sister was the executor and was ready to pull her hair out. I got my turn to deal with them....when I needed to update the 529's my dad had started for my sons (with me as beneficiary) - again, they kept losing the death certificates and paperwork. Since the 529 department is a separate group from the rest of Vanguard they could "see" that Vanguard had recognized my dad's death - but they needed their own copies of the death certificate to lose multiple times.

Vanguard is great when you're alive - but they don't always handle death well.