A Gold One
Dryer sheet wannabe
- Joined
- May 26, 2019
- Messages
- 12
Hello,
This is my 1st post to this forum, but I have been respectfully enjoying the benefits of everyone’s collective wisdom here for a few years now.?
Long story short - I retired 4 years ago and my wife and I are healthy. Our annual living expenses are primarily covered by annual rental and investment income, and any gaps we should be able to cover by a cash cushion. We do not anticipate needing tap an IRA until withdrawals are mandatory. I am a conservative investor by temperament – often to our detriment and at the expense of normal market gains. ?
The situation prompting my post is that I have a defined benefit plan from an old job that is eligible for 100% benefits when I turn 60 in a few months (i.e. if I delay taking benefits, I do not gain anything.). The monthly annuity with 50% survivor benefits (my wife is 13 years younger) would be $2,800. The lump sum payment would be $500,000.
I had been thinking that the lump sum would be taxed at ~35% on distribution and after a cursory look at investing the remaining amount and comparing that to the annuity, was inclined to just take the annuity for the peace of mind and lack of hassle. Then I discovered that I could open a new IRA and roll over the full amount without a tax hit. (I think this is correct…)
Having always assumed I would just take the annuity and forget about it, I am having trouble thinking through this clearly. My Morgan Stanley adviser recommends taking the lump sum and investing in some Blackrock funds with loads and pretty high expense ratios( BIICX for example). Based on ideas I’ve seen in this forum, I am inclined to open an IRA at vanguard and invest in something like VWINX or VTINX. I would be grateful for feedback about all this including any alternate ideas to suggest.
As a side question, when a fund is in an IRA, does it matter if the fund is designed to be tax efficient or not?
Thank you!
This is my 1st post to this forum, but I have been respectfully enjoying the benefits of everyone’s collective wisdom here for a few years now.?
Long story short - I retired 4 years ago and my wife and I are healthy. Our annual living expenses are primarily covered by annual rental and investment income, and any gaps we should be able to cover by a cash cushion. We do not anticipate needing tap an IRA until withdrawals are mandatory. I am a conservative investor by temperament – often to our detriment and at the expense of normal market gains. ?
The situation prompting my post is that I have a defined benefit plan from an old job that is eligible for 100% benefits when I turn 60 in a few months (i.e. if I delay taking benefits, I do not gain anything.). The monthly annuity with 50% survivor benefits (my wife is 13 years younger) would be $2,800. The lump sum payment would be $500,000.
I had been thinking that the lump sum would be taxed at ~35% on distribution and after a cursory look at investing the remaining amount and comparing that to the annuity, was inclined to just take the annuity for the peace of mind and lack of hassle. Then I discovered that I could open a new IRA and roll over the full amount without a tax hit. (I think this is correct…)
Having always assumed I would just take the annuity and forget about it, I am having trouble thinking through this clearly. My Morgan Stanley adviser recommends taking the lump sum and investing in some Blackrock funds with loads and pretty high expense ratios( BIICX for example). Based on ideas I’ve seen in this forum, I am inclined to open an IRA at vanguard and invest in something like VWINX or VTINX. I would be grateful for feedback about all this including any alternate ideas to suggest.
As a side question, when a fund is in an IRA, does it matter if the fund is designed to be tax efficient or not?
Thank you!