What to do with small IRA?

**Khan** · 03-25-2008, 08:31 PM

Opinions needed.

I have a traditional IRA from years ago; less than $10,000.

I don't need the money now (gross from pension and CDs is ~$35,000 and I'm not spending all of that).

Options:
A) Slowly withdraw starting at 59.5 (2 years from now)

B) Withdraw starting at age 62 (when pension decreases) (thereby delaying SSA payments)

C) Convert to Roth (all at once or incrementally) and combine with existing Roth (~$25,000)

D) Roll over into TSP (so far untapped)

**Want2retire** · 03-25-2008, 09:37 PM

What are your plans for your TSP? Will you begin drawing monthly payments from it at 62? If so, (B) and (D) would be very similar.

I like (B) because of the lifetime increase in SSA payments. But if you plan to start drawing on your TSP at 62, it might be simpler to just roll it over into the TSP and draw on it from there.

**Khan** · 03-25-2008, 09:48 PM

Quote:

Originally Posted by Want2retire

What are your plans for your TSP? Will you begin drawing monthly payments from it at 62? If so, (B) and (D) would be very similar.

I like (B) because of the lifetime increase in SSA payments. But if you plan to start drawing on your TSP at 62, it might be simpler to just roll it over into the TSP and draw on it from there.

I just don't know.

As I said, I don't need any of the money (IRAs, TSP, US BONDS, etc).

Another question might be: what do I do with the money I do withdraw?

I never planned for the possibility of having money I don't need.

Maybe I should increase donations to charity.

Alan · 03-25-2008, 09:58 PM

Quote:

Originally Posted by Khan

I never planned for the possibility of having money I don't need.

Maybe I should increase donations to charity.

At 62, will you really be in a position where this is money you don't need? If so, donate to charity if that is something you value doing, and that is also a pretty tax-efficient thing to do.

**Want2retire** · 03-25-2008, 10:04 PM

You'll have to withdraw RMDs from your TSP when you reach 70 and a half years old.

You might want it for charity. Or, you could use it when selling your house and moving someplace else, a possibility that you have mentioned. Perhaps some other use for it will present itself to you as years pass.

If I were in your situation, I would roll it over into the TSP and then withdraw from the TSP via monthly payments starting at 62. You can change the amounts of these payments each year. So, you could begin by taking high enough payments to compensate for your decrease in pension at that age.

Once you start receiving SSA, you could either lower the monthly payments to $25/month (the minimum), or you could continue and invest, contribute to charity, or whatever you wish. (?)

packrat44 · 03-25-2008, 10:31 PM

Quote:

Originally Posted by Khan

I just don't know.

I never planned for the possibility of having money I don't need.

Maybe I should increase donations to charity.

IMO you should choose: E) donate to Packrat's retirement fund.

jIMOh · 03-26-2008, 07:57 AM

Will the RMDs at age 70.5 or the TSP withdraws at age 62 move you into a higher tax bracket?

Coach · 03-26-2008, 09:34 AM

Khan, if Packrat's offer doesn't sway you, it's a nice amount to start up a charitable gift account with. Schwab has a $5K minimum initial contribution. The Khan Fund for ... has a ring to it!

Coach

TromboneAl · 03-26-2008, 10:06 AM

I like C (convert to roth and combine), since it makes your portfolio simpler.

Art G · 03-26-2008, 10:29 AM

Quote:

Originally Posted by Khan

Opinions needed.

I have a traditional IRA from years ago; less than $10,000.

I don't need the money now (gross from pension and CDs is ~$35,000 and I'm not spending all of that).

Options:
A) Slowly withdraw starting at 59.5 (2 years from now)

B) Withdraw starting at age 62 (when pension decreases) (thereby delaying SSA payments)

C) Convert to Roth (all at once or incrementally) and combine with existing Roth (~$25,000)

D) Roll over into TSP (so far untapped)

It's easy for me to say since I'm not the one having to pay the taxes, but I'd convert it to your Roth. You will avoid any RMD's and if you don't need the money, you've created a tax free growth fund for your kids.JMO

**Khan** · 09-01-2008, 05:34 PM

Still haven't decided what to do about TSP, IRAs, or anything else.

Might start increasing 'income' starting 2009.

Gworker · 09-01-2008, 07:21 PM

I'd just roll it into your TSP. I had about $8,000 from a state retirement plan that I rolled into TSP. It was easy to roll it over to TSP.

LOL! · 09-01-2008, 08:46 PM

Since your expenses are so low, you must be in the 0% tax bracket. This means that you should be convert to Roth IRA. You should even consider converting some of your TSP each year to a Roth IRA while you are in the such a low tax bracket. Do a little each year. Don't wait until it's too late!

FinanceDude · 09-02-2008, 09:28 AM

1)Convert to Roth
2)Convert to Roth
3)Convert to Roth

have I made myself clear??

**Khan** · 09-11-2008, 05:32 PM

Quote:

Originally Posted by Khan

Still haven't decided what to do about TSP, IRAs, or anything else.

Might start increasing 'income' starting 2009.

Have finally decided.

Will convert/combine IRA(s) in 2008.

Will start withdrawals from TSP in 2009.

Will donate more and spend more and invest rest.

03-25-2008, 08:31 PM	#1
Khan Moderator Join Date: Aug 2006 Location: Greater Dayton area Posts: 3,412	What to do with small IRA? Opinions needed. I have a traditional IRA from years ago; less than $10,000. I don't need the money now (gross from pension and CDs is ~$35,000 and I'm not spending all of that). Options: A) Slowly withdraw starting at 59.5 (2 years from now) B) Withdraw starting at age 62 (when pension decreases) (thereby delaying SSA payments) C) Convert to Roth (all at once or incrementally) and combine with existing Roth (~$25,000) D) Roll over into TSP (so far untapped) __________________ "Candle wax and red wine can do interesting things to a keyboard."

03-25-2008, 09:37 PM	#2
Want2retire Moderator Join Date: Jan 2007 Location: New Orleans Posts: 6,418	What are your plans for your TSP? Will you begin drawing monthly payments from it at 62? If so, (B) and (D) would be very similar. I like (B) because of the lifetime increase in SSA payments. But if you plan to start drawing on your TSP at 62, it might be simpler to just roll it over into the TSP and draw on it from there. __________________ Dreaming of retirement....305 days " - - my greatest skill has been to want but little - - " (Henry David Thoreau, in Walden)

03-25-2008, 10:04 PM	#5
Want2retire Moderator Join Date: Jan 2007 Location: New Orleans Posts: 6,418	You'll have to withdraw RMDs from your TSP when you reach 70 and a half years old. You might want it for charity. Or, you could use it when selling your house and moving someplace else, a possibility that you have mentioned. Perhaps some other use for it will present itself to you as years pass. If I were in your situation, I would roll it over into the TSP and then withdraw from the TSP via monthly payments starting at 62. You can change the amounts of these payments each year. So, you could begin by taking high enough payments to compensate for your decrease in pension at that age. Once you start receiving SSA, you could either lower the monthly payments to $25/month (the minimum), or you could continue and invest, contribute to charity, or whatever you wish. (?) __________________ Dreaming of retirement....305 days " - - my greatest skill has been to want but little - - " (Henry David Thoreau, in Walden)

03-26-2008, 07:57 AM	#7
jIMOh Thinks s/he gets paid by the post Join Date: Apr 2007 Location: Milford, OH Posts: 1,277	Will the RMDs at age 70.5 or the TSP withdraws at age 62 move you into a higher tax bracket? __________________ Light travels faster than sound. That is why some people appear bright until you hear them speak. One person's stupidity is another person's job security.

03-26-2008, 10:06 AM	#9
TromboneAl Thinks s/he gets paid by the post Join Date: Jun 2006 Posts: 4,330	I like C (convert to roth and combine), since it makes your portfolio simpler. __________________ - Al -- Always serious, never joking. No, wait. Never serious... Always... I forget.

03-26-2008, 09:34 AM	#8
Coach Full time employment: Posting here. Join Date: Nov 2005 Location: Colorado, USA Posts: 705	Khan, if Packrat's offer doesn't sway you, it's a nice amount to start up a charitable gift account with. Schwab has a $5K minimum initial contribution. The Khan Fund for ... has a ring to it! Coach

09-01-2008, 05:34 PM	#11
Khan Moderator Join Date: Aug 2006 Location: Greater Dayton area Posts: 3,412	Updating old posts Still haven't decided what to do about TSP, IRAs, or anything else. Might start increasing 'income' starting 2009. __________________ "Candle wax and red wine can do interesting things to a keyboard."

09-01-2008, 07:21 PM	#12
Gworker Recycles dryer sheets Join Date: Jul 2007 Posts: 88	I'd just roll it into your TSP. I had about $8,000 from a state retirement plan that I rolled into TSP. It was easy to roll it over to TSP.

09-01-2008, 08:46 PM	#13
LOL! Thinks s/he gets paid by the post Join Date: Jun 2005 Posts: 2,340	Since your expenses are so low, you must be in the 0% tax bracket. This means that you should be convert to Roth IRA. You should even consider converting some of your TSP each year to a Roth IRA while you are in the such a low tax bracket. Do a little each year. Don't wait until it's too late!

09-02-2008, 09:28 AM	#14
FinanceDude Give me a museum and I'll fill it. (Picasso) Give me a forum ... Join Date: Aug 2006 Posts: 7,727	1)Convert to Roth 2)Convert to Roth 3)Convert to Roth have I made myself clear?? __________________ 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).......:)

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