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Old 02-14-2014, 08:37 AM   #21
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Originally Posted by Tom52 View Post
So far as I can make out, approx. 40% is in a brokerage account containing stock from 25 different companies (ex. Disney, Home Depot, Walmart, Walgreens, Coca-Cola, etc.)
Sounds like a bunch of blue chip holdings. You get a "run-up in cost basis" when the account owner dies, so very little tax liability to you and your sister. I would keep the stocks and not sell right now, unless these are stocks you don't want to own. If they are in a fee account at Ameriprise, you should be able to sell them without paying individual stick trade commissions, but be sure to ask. It is very easy to transfer a bunch of stocks (in-kind transfer) from Amerprise to somewhere else. I would not suggest Vanguard, their broker dealer area is not low cost. I would consider Schwab or TD Ameritrade for holding that.

The next biggest holding of approx. 20% of total refers to symbol INTAX but for the life of me I can't find info on this account of the Ameriprise website.
Based on a little digging I found, it looks like a Columbia fund, AMT-Free Tax Exempt Bond Fund A. You should be able to liquidate without any fees.

The third largest holding, approx. 15% of total I did find on the Amerprise website is a variable annuity RVS RAVA 4 ADVANT NQ. The remaining 25% is spread out over a small IRA ($28K) CDs ($82K), MM (26K), life Ins ($50K), and 5 or 6 smaller annuitites that are still in payout and some have never started a payout (about $185K).
This is quite a mish-mash of stuff. Get as much info as you can about them and check with a CPA to see how liquidating them would affect your taxes. You could cash out the annuities, but see if there are other options, like continuing the contracts rather that a 5 year payout of the balances. Never hurts to ask.

Sorry for your loss. Take your time, and don't listen to any sales pitches about all the "great ideas" they have for you. You might need to help educate your sister a little............but she may stay with them as you hinted of luck........

Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)

This Thread is USELESS without pics.........:)
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After meeting with Ameriprise
Old 02-16-2014, 06:05 AM   #22
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After meeting with Ameriprise

I truly appreciate all of the advice provided. After the meeting with the Ameriprise rep. I feel I have a bit more knowledge, (no paperwork was signed). It appears there is over $200K ($100K for me), that would have to be taxed at my current highest tax bracket if I were to just cash out all the annuities and IRA money.

I have some time to evaulate the options to determine what will work best for my situation. My initial thoughts are to:
A. Keep all of the stocks as is. I can take my time and later determine if there are any changes needed. My equity position is a bit to low in my current AA already so this will bring it more in line where I would like to be going forward.
B. Any cash not subject to taxes (life ins., MM, CDs when maturing end of this year) I would probably invest in Vanguard Wellington or similar.
C. The value of current annuities that are subject to federal taxes and the IRA money, (approx $100K), causes me the most concern. As I mentioned in my original post I am retiring end of February this year but my income will be fairly high for 2014. For 2015 I will have no W2 earnings, only about $12,000 in 1099 income. This would be the case for the next 5 years until SS at 66 discounting any inheritance. Due to need for health care coverage thru ACA my plan was to control MAGI via Roth IRA conversions during this 5 year period. I may have to revise this plan by taking payouts of the untaxed annuity money over this 5 year period to control MAGI and still qualify for ACA subsidy. Unfortunately, that would greatly reduce my TIRA to Roth IRA conversions. I guess there is always the possibility to delay SS a few more years.

I would appreciate your comments if you think there are any fatal flaws in my initial thoughts.

My motto is.... "a dollar saved is better than a dollar earned. I don't pay tax on the dollar I saved."
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Old 02-16-2014, 10:54 AM   #23
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I don't understand why you have to cash out your IRA. Can't you roll it over to Vanguard? In that case, you would pay $0 in taxes.

Keep in mind you might pay fees by selling funds in the IRA. This would be the only question I'd try to determine at Amerprise: how much will I pay in fees if I transfer my IRA elsewhere. I'm also not convinced you'll get a straight answer from your FA.

If you do this, I would initiate the transfer from Vanguard. Tell Vanguard you want to rollover an IRA and they will handle the details.

I might be off, but if your FA at Amerprise told you the only option is to cash out your IRA, well, that's outright sleazy. A major scare tactic to make you think you'll have to pay a high % of your investments to leave them.

I can't answer your question regarding the VA, since I know nothing about this product.

It just occurred to me that one could setup a nice (small) business helping people leave Amerprise. One time flat fee for consultation. Heck, I'd almost think it would be a fun volunteer gig during retirement.
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Old 02-16-2014, 12:53 PM   #24
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Unless there is very little money involved, put off this meeting until you can confer with a competent attorney. Ameriprise has no standing to tell you how things should be done, and their only interest is in their interests.

If you both want to liquidate, also IMO an excellent idea, likely your attorney can do this for you. You will of course have to part with a bit of money to hire the attorney to do this.

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Old 02-16-2014, 01:26 PM   #25
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The money that's in the IRA. Assuming your parents were over 70.5, then rolling it to a beneficiary IRA would involve RMD's for each year based on your age, and your parents age. If you google beneficiary rmd calculator you can get an idea of what the RMDs would be.

This could, indeed, impact your plans on keeping your taxable income low to qualify for ACA subsidies. You'll need to do the math to see if the subsidies are worth more than just paying the tax hit this year - in an already high tax rate year for you. Sounds like it's time to do the math or hire an accountant to figure out your best strategy.

I have a beneficiary IRA and take annual RMDs. It's part of my ER plan. I definitely have been modeling how the RMDs are going to impact the various tax situations going forward. But overall doing annual RMDs has worked out well for me. (But I'm still working.)
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Old 02-16-2014, 09:26 PM   #26
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Originally Posted by Tom52 View Post
The value of current annuities that are subject to federal taxes and the IRA money, (approx $100K), causes me the most concern.
I'm not familiar with the tax issues on the annuities, but there are three basic withdrawal options on the share of the IRA you have inherited: withdraw it all by the end of the year after the decedent's death, withdraw it all on a 5 year schedule or withdraw it over a longer period using a table of Required Minimum Distributions (RMDs). The applicable RMD table is not the same as for over-70 withdrawals from your our IRA account, but the concept is the same: the percentage starts out low and grows a bit each year.

All three methods result in the amount withdrawn being reported to the IRS as taxable income via a 1099-R. Any of the three have the option to accelerate taxable withdrawals if you need the cash or if your tax planning has some ceiling room for additional taxable income before hitting the top of a tax bracket or an income target.

It sounds like the RMD option would be best for you, minimizing taxable income in the years you hope to qualify for an ACA subsidy.

I'll give an example of how setting up an Inherited IRA at Vanguard has worked for DW over the past few months.

DW's mother died in September. She left a traditional IRA at Broker X to two beneficiaries named back when she set up the accounts - DW and my BIL. We're on the home stretch of a multi-step process that will end with DW's 50% share being held in a self-managed Vanguard Inherited IRA.

  • Death was reported to the IRA custodian a few weeks after the event. The only immediate action was to stop any scheduled distributions and to confirm beneficiary status for DW and her brother. (Roughly where you are in the process.)
  • Each beneficiary acts separately. BIL wanted the cash, so he submitted a distribution request. DW submits paperwork to set up a beneficiary account with X, in this case an “Broker X Inherited IRA Application.”
  • X sends a “thank you for choosing us” new account package by mail. DW uses the new account number to set up online access, showing a $0 balance.
  • After several weeks of no change in the balance, we call X. “Oh, I see you haven’t submitted the Inherited IRA Distribution form.” We go to the local X office to complete the form, have it notarized, and turn it in.
  • About that time, we call Vanguard for some guidance. We mail a “please set up a $0 account to receive a transfer” letter with the Vanguard “IRA Asset Transfer” form.
  • A week after sending the forms to X, 50% of the fund shares in MIL’s account are transferred to DW’s account. DW now owns shares in a dozen high-fee mutual funds.
  • A few days later, the new Vanguard account is established and shows up on DW’s online account page.
  • Next - with both an origin and destination account number now available - we initiate the trustee-to-trustee transfer by mailing an account-specific “IRA Asset Transfer” form to Vanguard.
  • A week later, a “transfer in progress” message appears on the Vanguard account page, with another 12 days estimated for completion
  • X calls by phone the next week. They have received Vanguard’s request, but there were a couple of points to confirm. The most important thing was they wanted DW to go on-line herself to sell all the mutual funds that were formerly in MIL’s account. (This saved some money vs. them liquidating the mutual funds on our behalf.)
  • X mails a check to Vanguard the next day.
  • A week later, the funds have arrived and have been used to purchase a MMF in DW’s Vanguard Inherited IRA account.
  • At the end of January, statements from X arrive and say that there is a $6 balance in DW’s X account, due to some lagging dividend postings.
  • X sends the $6 to the Vanguard account a week later, with no prompting.
  • Right now, we’re waiting to see the $6 posted to the Vanguard account.
In hindsight, the particular path we chose was probably less than optimal. Total elapsed time was 5 months. This could have been cut in half or less if we had avoided some procrastination and if we had been more diligent in pestering X and Vanguard to be sure there was always some action underway.

Keep good notes as you go along.
No doubt a continuous prosperity, though spendthrift, is preferable to an economy thriftily moral, though lean. Nevertheless, that prosperity would seem more soundly shored if, by a saving grace, more of us had the grace to save.

Life Magazine editorial, 1956
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Need some advice on upcoming inheritance currently held at Ameriprise
Old 02-16-2014, 09:57 PM   #27
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Need some advice on upcoming inheritance currently held at Ameriprise

Htown Harry,

Thanks for the step by step notes on how your wife handled this. My Dad will be 88 next month and his assets are all in a Traditional IRA. My sister and I are the beneficiaries. I've read about the Inherited IRA and the RMDs but wasn't sure how you get through the process when the time comes.

His IRA is at Wells Fargo and it's multiple funds and stocks with high expense ratios. If anything is left I would move my half to Vanguard and simplify.
Married, both 63. DH retired June, 2010. I have a pleasant little part time job.
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Old 02-17-2014, 12:58 PM   #28
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You're getting a lot of great comments from people on how to handle the Ameriprise accounts, but I want to comment on two things.
You may want to reconsider adding your DW to the accounts. Once you add her the money is as much hers as yours. Two things can go wrong here. If you were to divorce her, she gets her half of the money. I'm not wishing that on you and hope it never happens, but you never know. The other concern is if you should die and she remarries, if she added him to the now can be accessed by him and inherited by his kids. A better approach would be to keep it in your name and set up a trust for your wife and kids to keep it for their use. You can either put the money in the trust or make the trust the beneficiary. Check with an estate planning attorney for the best approach.
The second thing is the sale of the house. I was burned by the probate judge because we did not get an official appraisal of the property near the time of death. Property values at the time were rising rapidly and we had to wait until probate closed to sell the property. The judge set the value of the property much lower than our real estate agent said it was worth at the time of death. The state of California nailed us for taxes on the sale of the real estate for the difference on the actual sale price and what the judge set as the value at death. It took two years to close probate.

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