tIRA bond fund(s)

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BeWyse
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tIRA bond fund(s)

Post by BeWyse » Fri Aug 17, 2018 3:39 pm

After retiring in early 2019, I plan to transfer my 401K to Vanguard. Concerning the tIRA portion: which Vanguard fund(s) should hold withdrawals that will be made for a number of years of Roth conversions starting in 2019, then RMDs starting in 2023? Trying to make life as simple as possible so I would really rather not resort to tIRA CDs. I should think one or more of the bond index funds, but don't know which ones might be the best fit.

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BL
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Re: tIRA bond fund(s)

Post by BL » Fri Aug 17, 2018 3:44 pm

I would consider moving the equity funds like total US and total International to get the highest expected returns in Roth and keep bonds in tIRA.

Don't know what bonds you have, or whether it would matter. You can change things around in either account with no tax worries when buying and selling.

PFInterest
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Re: tIRA bond fund(s)

Post by PFInterest » Fri Aug 17, 2018 3:52 pm

you keep your money invested the same way. doing Roth conversions just changes the bucket (then you change the funds).

so your asking if you should protect that money for the years you are doing conversions? no.

BeWyse
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Re: tIRA bond fund(s)

Post by BeWyse » Fri Aug 17, 2018 3:54 pm

Equities in Roth, bonds in tIRA. Just don't know in the tIRA portion if the Total Bond Index Fund (which most people here seem to like) works for withdrawals in the near future, or if I need to add a shorter term bond fund to draw from.

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BL
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Re: tIRA bond fund(s)

Post by BL » Fri Aug 17, 2018 9:54 pm

BeWyse wrote:
Fri Aug 17, 2018 3:54 pm
Equities in Roth, bonds in tIRA. Just don't know in the tIRA portion if the Total Bond Index Fund (which most people here seem to like) works for withdrawals in the near future, or if I need to add a shorter term bond fund to draw from.

Perhaps you could switch some to Prime Money Market, and possibly some to short term bond, if you will be living off it. If it is for Roth, exchange and re-balance if needed.

PFInterest
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Re: tIRA bond fund(s)

Post by PFInterest » Sat Aug 18, 2018 6:42 am

BeWyse wrote:
Fri Aug 17, 2018 3:54 pm
Equities in Roth, bonds in tIRA. Just don't know in the tIRA portion if the Total Bond Index Fund (which most people here seem to like) works for withdrawals in the near future, or if I need to add a shorter term bond fund to draw from.
Likely not as aren't you withdrawing for many years?

BeWyse
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Re: tIRA bond fund(s)

Post by BeWyse » Sat Aug 18, 2018 7:14 am

Sorry, PFInterest, I do not understand your question. I am in uncharted territory even though I have learned so much from this site.
Last edited by BeWyse on Sat Aug 18, 2018 11:00 am, edited 1 time in total.

PFInterest
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Re: tIRA bond fund(s)

Post by PFInterest » Sat Aug 18, 2018 8:39 am

BeWyse wrote:
Sat Aug 18, 2018 7:14 am
Sorry, PFInterest, I do not understand your question. I am in uncharted territory even thought I have learned so much from this site.
no worries.
the reason to choose a short term fixed income option is because you either A) need the money before the duration of the fund (because a change in intrest rates wont make up for the loss until around that time) or B) you need the money for safety (car, house, vacation, etc purchase).

if it is part of your overall retirement pot, then why would it matter? the money is not being withdrawn immediately, and over your remaining lifetime, int rates with both rise, and fall, multiple more times. like stocks, its not something necessary to time for.

so for the majority of people who dont have specific use cases, a int term total bond fund is all one needs (such as Vanguard Total Bond).

BeWyse
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Re: tIRA bond fund(s)

Post by BeWyse » Sat Aug 18, 2018 9:52 am

I will be making yearly withdrawals starting in 2019 for Roth conversions, not for living expenses. So am I correct in putting at least that portion allotted to the 2019 conversion in Prime Money Market and the rest in Total Bond index fund?

Chip
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Re: tIRA bond fund(s)

Post by Chip » Sat Aug 18, 2018 10:29 am

BeWyse wrote:
Sat Aug 18, 2018 9:52 am
I will be making yearly withdrawals starting in 2019 for Roth conversions, not for living expenses. So am I correct in putting at least that portion allotted to the 2019 conversion in Prime Money Market and the rest in Total Bond index fund?
Maybe I don't understand your situation fully, but you can keep everything in Total Bond and convert from tIRA to Roth "in kind", without selling anything. You just have the custodian move X number of shares from one account to the other.

BeWyse
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Re: tIRA bond fund(s)

Post by BeWyse » Sat Aug 18, 2018 10:57 am

Chip, that makes sense to me, but I plan on having only bonds for safety in tIRA and equities to grow in Roth. If I am in Vanguard funds at Vanguard, is it a problem, or do fees come into play, if I move bond funds in the tIRA to stock funds in the Roth? I am sorry for my trivial questions, but I have never used any brokerage before, just the company 401K, and I am trying to avoid the financial advisor who is lying in wait for my pending retirement.

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BL
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Re: tIRA bond fund(s)

Post by BL » Sat Aug 18, 2018 11:19 am

I am not aware of any costs buying or selling Vanguard funds at V.

If you have low $ amounts, get e-statements to avoid low-amount charges. No other charges that I am aware of except for work plans.

Sounds like you are not sticking to AA if going from bond to stock with no counter-balancing somewhere in your accounts or 401k. No harm in having some bonds in Roth or some equities in IRA, although I agree that most of your bonds, up to your % needed, should be in tax-deferred accounts if they fit. That doesn't mean other funds can't be there.

Think about Prime MM or short-term bonds for short-term needs here.

Besides Wiki, read about investing here:
viewtopic.php?f=1&t=6211

To get more specific help, put all info in "asking portfolio questions" format from here:
viewtopic.php?f=1&t=6212

Chip
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Re: tIRA bond fund(s)

Post by Chip » Sat Aug 18, 2018 3:24 pm

I agree with BL. I think most of us here adhere to a relatively fixed stock/bond ratio. So it's okay to have bonds in the Roth as well as in the tIRA. I have been Roth converting for years. Our tIRAs are all bonds but I have to have some bonds in the Roth as well in order to get to my desired stock/bond ratio.

I convert some bond funds "in kind" each year. It's a simple process.

BeWyse
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Re: tIRA bond fund(s)

Post by BeWyse » Sun Aug 19, 2018 5:08 am

Many thanks to all who replied. Your comments are very helpful.

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