VWIAX for a beneficiary IRA

[seraphim]

DW has two non spousal IRAs: 50k and 150k. RMDs required starting now lol.

We are considering putting the largest I to VWIAX (70/30 high dividends) and balancing to a 50/50 by putting the small IRA into a total stock fund.

I thought the more stable bond heavy fund would be a better choice since we have to withdraw each year, and the dividends would be a plus in the factor.

Trying to get as much out of the IRAS as they will completely disbursed in 27 years. Each year I can reinvest the RMDs into something to balance the allocation, if necessary. (We can live off our pensions alone if necessary).

Thoughts or problems with the idea?

 

[MichaelB]

seraphim, you have asked a number of questions about investments in your different retirement and taxable accounts. Do you have an overall asset allocation plan along with specific funds for the different asset classes? It might be easier for you to first do that, and then determine how to use the different accounts to implement the plan.

 

[pb4uski]

I agree with Michael that what you do needs to be consistent with an overall plan and there isn't sufficient insight on the overall plan to give you good advice.

For example, if you have pension/SS income that significantly provides for your living expenses AND you want to leave as much as possible to heirs, then you might be very aggressive in the investments in those IRA accounts. OTOH, if you rely on those RMDs for your for living expenses and don't have any taxable investments, what you propose may make sense.

 

[rescueme]

It might be easier for you to first do that, and then determine how to use the different accounts to implement the plan.

+1

 

[REWahoo]

Seraphim, you mention balancing to 50/50 for your DW's IRA, what does that do to your combined AA? I'm a fan of VWIAX but as the others have said, answering your question in isolation of an overall AA strategy may not result in you ending up with where you want to be from a big picture standpoint.

 

[LOL!]

Money is money. It does not matter whether you take it out of your right pocket and spend it or if you take it out of your left pocket and spend it.

It also doesn't matter if it is in an inherited IRA or your own IRA or your retirement account. After all, money is money.

My spouse has a small inherited IRA. It is invested exclusively in a short-term bond fund. The reason for that is that our overall portfolio asset allocation calls for us to have some short-term bonds. By putting some of them in that inherited IRA, we help fulfill our desired asset allocation. We also will minimize the size of the annual RMD that must come from that account and thus will minimize our taxes. The size of the annual RMD is small because (a) the account is small in value and (b) short-term bond funds do not increase quickly in value. We would rather have our other accounts increase more quickly in value because they get a better tax break than that inherited IRA.

I hope this is helpful.

 

[seraphim]

Lol

Yes, that does help? I'm trying to maximize the RMDs, though, so I don't have to draw from the rest of the portfolio if I don't have to. I can alleviate taxes by putting the MDS elsewhere, such as an HSA or other account


I haven't figured a total asset allotment yet - still learning and working on it. I just have some funds I have to do something with right now, as they're losing money at about 1.25%. I'm looking at a 50/50 to 70/30 overall allocation eventually, but when my other assets are available in January, I can configure them for whichever AA I end up choosing.

I got tossed into the deep end without warning.

It appears I have less options with the non spousal IRA account, so I figured if I set it up most efficiently, the rest would drop into place come January

I also have new investor jitters lol. Part of me wants to just give it to the financial planner to worry about, and pay the high fees involved.

And I do appreciate eveyonr's time. You've been extremely helpful.

 

[LOL!]

What do you mean "losing money at about 1.25%"? Are you saying they are stuck in an actively-managed fund with an expense ratio of 1.25%?

 

[seraphim]

In a MM at .25 and the FP gets a 1% on the total assets. It's a beneficiary IRA account. Rather than set up something in that account and continue paying the FP, I'd rather put into an account with an index fund. And no FP