|
04-09-2012, 10:55 PM
|
#1
|
Dryer sheet aficionado
Join Date: May 2011
Posts: 41
|
RMD
My husband and I both have pensions. We both have our own health care. I am about 12 years younger then him. I work part time. He had to take his first RMD this year. We don't plan on using the money. My question is should my husband's IRA and 401k be invested any differently then his usual asset allocation of 65/35. Should he keep some in cash?
|
|
|
|
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
04-10-2012, 04:13 AM
|
#2
|
Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,726
|
Hopefully there is one investment plan and asset allocation that covers all the accounts. If not, and the RMDs aren't needed, perhaps they can be used to set aside some emergency funds in a bank account.
|
|
|
04-10-2012, 05:34 AM
|
#3
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,375
|
Your AA target is across all of your taxable, tax-deferred and tax-free accounts. Typically your fixed income allocation would be in your tax-deferred or tax-free accounts to minimize taxes and your equities would be in taxable accounts since equities generate less taxable income.
|
|
|
04-10-2012, 07:46 AM
|
#4
|
Thinks s/he gets paid by the post
Join Date: Jan 2006
Posts: 4,172
|
Perhaps another way of asking your question is whether short term needs
(known in your case or unknown in the case of emergencies) should be kept in cash. There seem to be various schools of thought. Perhaps the right answer is person-dependent. If stocks and bonds both dropped significantly, how would you feel taking the same RMD from a depleted portfolio? Do you think the chances of that happening significant? If not, perhaps take the RMD from the asset class that didn't lose as much as a form of rebalancing. I'm assuming you are asking about a small cash position (perhaps 1-2 yrs of RMDs or 5-10% of retirement plan) that you would replenish periodically just for the RMDs)?
|
|
|
04-10-2012, 08:22 AM
|
#5
|
gone traveling
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,851
|
Is the question related to RMD's in general, or "excessive RMD's" - that is, withdrawls not needed for living expenses, but withdrawls required due to current tax laws.
The other question is if it is excessive RMD's, do you want to invest for your lifetime(s), or for those of the future. If it's for the "next generation(s)", my suggestion would be to look at their entire lifespan and invest the $$ agressively - at this time. I ask this due to having a disabled (adult) son, who we treat our "remainder estate" in a different manner than our own. We are more agressive with "his future money", quite differently than we treat our "remainder life" money.
Just wondering...
|
|
|
04-10-2012, 10:14 AM
|
#6
|
Thinks s/he gets paid by the post
Join Date: Jul 2005
Posts: 4,366
|
You may be able to replace whatever you need to sell in a 401k/IRA with a simultaneous buy in your taxable account. Or buy it a few days later with the RMD funds if necessary. In that case you don't really need to worry about disturbing your AA or raising extra cash ahead of time. Or you can do the same thing a little earlier so that normal cash within your AA is sitting in the 401k/IRA ready for the RMD when the time comes. Either way, stick to your AA. Only the location of your assets is changing, not the AA.
|
|
|
04-10-2012, 01:50 PM
|
#7
|
Thinks s/he gets paid by the post
Join Date: Oct 2010
Posts: 2,472
|
My tIRA and Roth have the same balanced fund. For me it was how many shares out of one and into another.
__________________
For me experiences are not good or bad, just different
|
|
|
04-10-2012, 05:28 PM
|
#8
|
Dryer sheet aficionado
Join Date: May 2011
Posts: 41
|
We have the bulk of our savings in Tax Deferred accounts. The RMD is not needed for day to day expenses. I will probably be investing it into Vanguard Total Stock Market Index or into Vanguard Total International Stock fund. We have about 5% in cash in American Express Savings account but its outside the tax deferred accounts. Is the Wellington good for a taxable account?
|
|
|
04-11-2012, 01:20 PM
|
#9
|
Thinks s/he gets paid by the post
Join Date: Jun 2007
Location: near Canadian border and near Mexican border
Posts: 1,142
|
Quote:
Originally Posted by Carol911
He had to take his first RMD this year. We don't plan on using the money. ?
|
You might consider using this money toward a ROTH conversion. Doing this for a few years would reduce future mandatory withdrawals. You might also consider placing any of your non-tax efficient investments in the ROTH IRAs.
__________________
Pigs get fat, hogs get slaughtered. That's my story and I am sticking to it.
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|