Need some IRA advice please

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JohnQ1954
Posts: 4
Joined: Fri Apr 13, 2018 11:07 am

Need some IRA advice please

Post by JohnQ1954 » Fri Apr 13, 2018 11:29 am

Hi all,

I first want to start out by saying that I wish I learned about investing when I was younger however you know what they always say it's never too late to learn. I am currently 64 years old. I currently have about 150K in a traditional IRA (currently in a variable annuity with Prudential that I am liquidating and transferring to Fidelity as we speak). The fees were high and I had no idea until I recently started reading this website and many others to learn about basic investing and index funds etc. Over 25 years in the account of my initial investment of 50K (never contributed more than my initial amount) 150k is what they have been able to produce over that time. Basically I don't need this money now, nor do I think I will need it in a few years as I have other streams of supplemental income, however I know per RMD rules I will need to start taking some out at the age of 70.5? I'm not sure how much I will be required to remove every year but I want to ask you guys, what do you recommend I do with this money in the mean time so I can make this money grow or provide income. I also currently work and plan to do so for at last 2-3 more years.

Thank you for all of your assistance in this matter.

Silk McCue
Posts: 959
Joined: Thu Feb 25, 2016 7:11 pm

Re: Need some IRA advice please

Post by Silk McCue » Fri Apr 13, 2018 3:29 pm

Congrats on getting out of the Variable Annuity as your return over that period was just a little over 4% per year. I made the mistake of buying one 10 years ago and exited it 2 years ago.

For your funds at Fidelity you will want to invest them in a manner consistent with the philosophy of this site and with an asset allocation that is appropriate for you. Click on Start Here on the main page and you will quickly begin your education.


In regards to RMD's please take a look at this page on Bogleheads https://www.bogleheads.org/wiki/IRA_distribution_tables.

If you are going to be in a lower tax bracket up until you retire and start social security you should explore whether ROTH conversions on the IRA are appropriate. There are many conversations on this forum for Roth conversions. They are not necessary or appropriate for everyone but they are for my wife and I due to Social Security taxation due to a COLA'd pension when that time comes. You really want to look at these funds within the context of all your streams of income and put together a plan for your retirement years.


Cheers

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Peter Foley
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Location: Lake Wobegon

Re: Need some IRA advice please

Post by Peter Foley » Sat Apr 14, 2018 11:40 am

Regarding RMD's. During the first 5 years you are required to take out an average of about 4% per year. It starts out a little less than that, but for planning purposes 4% is a good starting point.

JohnQ1954
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Joined: Fri Apr 13, 2018 11:07 am

Re: Need some IRA advice please

Post by JohnQ1954 » Sat Apr 14, 2018 6:23 pm

Thanks guys for all your input.

What do you think about my current scenario and me AA 100% towards US equities like a total US market index fund? Like I said I don’t really have any need for this cash in the next 5 years or so and I would hate to miss on any potential appreciation. Please advise..

Silk McCue
Posts: 959
Joined: Thu Feb 25, 2016 7:11 pm

Re: Need some IRA advice please

Post by Silk McCue » Sun Apr 15, 2018 10:45 am

As a general rule 100% equities for an investment that you may want to use 5 years out would be much too risky. The potential downside (30% market drop followed a long and slow recovery) is the flip side of
I would hate to miss on any potential appreciation.
My best advice to you is to review my first post and gain an education that I received when coming across this site about 2.5 years ago. How you handle this $150k should be decided within complete context of all your finances. Part of that planning will include the taxation of your income in the years to come. When you are ready you can even post your information in a recommended format and get feedback from some very knowledgeable folks.

https://www.bogleheads.org/wiki/Asking_ ... _questions

Cheers

pkcrafter
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Location: CA
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Re: Need some IRA advice please

Post by pkcrafter » Sun Apr 15, 2018 10:56 am

JohnQ1954 wrote:
Sat Apr 14, 2018 6:23 pm
Thanks guys for all your input.

What do you think about my current scenario and me AA 100% towards US equities like a total US market index fund? Like I said I don’t really have any need for this cash in the next 5 years or so and I would hate to miss on any potential appreciation. Please advise..
What about after 5 years? Will you need withdrawals for living expenses?

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

JohnQ1954
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Joined: Fri Apr 13, 2018 11:07 am

Re: Need some IRA advice please

Post by JohnQ1954 » Sun Apr 15, 2018 9:31 pm

Thanks all for your input. No Paul I do not need the cash after 5 years for living expenses.

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celia
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Location: SoCal

Re: Need some IRA advice please

Post by celia » Sun Apr 15, 2018 9:59 pm

JohnQ1954 wrote:
Fri Apr 13, 2018 11:29 am
I currently have about 150K in a traditional IRA (currently in a variable annuity with Prudential that I am liquidating and transferring to Fidelity as we speak).
I just want to clarify this. I hope you are transferring it to another traditional IRA at Fidelity. Whatever comes out of the tax-deferred account in any year will be taxed as ordinary income for that year. You likely don't want $150K added to your income this year! And anything withdrawn before age 59.5 will also have a penalty, although that no longer applies to you.

JohnQ1954
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Joined: Fri Apr 13, 2018 11:07 am

Re: Need some IRA advice please

Post by JohnQ1954 » Mon Apr 16, 2018 7:41 am

Hi Celia,

Yes transferring to a Traditional IRA. Thank you

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