Investment suggestions for spouse

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Topic Author
NestEggLove
Posts: 62
Joined: Thu Jul 05, 2018 9:22 am

Investment suggestions for spouse

Post by NestEggLove » Sat Nov 16, 2019 11:02 am

Hi,
My currently unemployed wife (for a few years, but will probably go back to work) who is in her early fifties, has come into some money from an inheritance and sale of a deceased parent’s house.
She doesn’t have much money invested already, but wants to put a good chunk of what she’s newly come upon into investments —— moderately conservative, given age.

Correct me if I’m wrong, but the research I’ve done says she obviously can’t put it into a 401k/403b, and those proceeds don’t fall under “earned income”, so no IRAs.

So, that just leaves a non-retirement account ??
I was thinking a Vanguard Target Retirement fund, or one of their somewhat conservative Lifestyle funds —— would that be not a great idea for the bond portion in non-tax-advantaged ? But maybe that’s the best option in her situation.
She would definitely be the hands off type, and probably wouldn’t want me messing around with it too much either after it’s been invested. That’s why I’m thinking a balanced-type fund.

I have my own investments, but am thinking of us separately (though she’s the primary beneficiary) because she’s an individual that way 8-)

Married filing jointly
5.9% state tax
12% federal

—-her investments, negligible to list here

Thanks for any and all feedback !
Last edited by NestEggLove on Sun Nov 17, 2019 10:05 am, edited 1 time in total.

delamer
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Re: Investment suggestions for spouse

Post by delamer » Sat Nov 16, 2019 11:25 am

Assuming that you have earned income, your wife may be able to open a spousal IRA. It depends on whether you meet the income requirements.

Here’s more information: https://www.nerdwallet.com/blog/investi ... -open-one/

Topic Author
NestEggLove
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Re: Investment suggestions for spouse

Post by NestEggLove » Sat Nov 16, 2019 11:38 am

Thanks, Delamer!
Had read about spousal IRAs, not sure we’ll go that route (plus the amount she’s dealing with is probably the six figure range), but thanks for the suggestion ! Will research into it.

HomeStretch
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Re: Investment suggestions for spouse

Post by HomeStretch » Sat Nov 16, 2019 11:47 am

With zero earned income, aside from possibly funding a (spousal) IRA, the inherited funds would go into some type Taxable account(s)/investment(s). If spouse doesn’t have any other accounts and wants to have a bond allocation, then a Target Date Fund (TDF) or LifeStrategy Fund (LSF) in a Taxable brokerage account could be good simple choice.

The equity % of some TDFs decreases over time whereas the LSF % remains constant. As there are likely tax consequences for holdings changes in a Taxable account, be sure the TDF or LSF selected suits spouse’s asset allocation over her investing horizon.

dbr
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Re: Investment suggestions for spouse

Post by dbr » Sat Nov 16, 2019 11:48 am

I would opt for separate stock and bond funds so things are easier to untangle if tax or other considerations change your plan. If she puts it all in a balanced fund now there could be taxable gains and costs to change later.

Part of the calculation is your current tax rates. You may not have enough income to justify tax exempt bonds. On the other hand at current low interest rates holding bonds in taxable in not as punitive as it is at higher tax rates and higher incomes.

An option if taxable interest becomes an issue if for her to just hold stocks and you to hold the compensating bonds in your tax deferred accounts. That might not be a good choice if she wants this inheritance to be a separate asset held in its own right.

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RickBoglehead
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Re: Investment suggestions for spouse

Post by RickBoglehead » Sat Nov 16, 2019 11:49 am

NestEggLove wrote:
Sat Nov 16, 2019 11:38 am
Thanks, Delamer!
Had read about spousal IRAs, not sure we’ll go that route (plus the amount she’s dealing with is probably the six figure range), but thanks for the suggestion ! Will research into it.
You should strongly consider a spousal IRA up to the max for both 2019 and 2020. Yes, you can't eat the 6 figure balance, but every little bit helps in retirement.
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.

dbr
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Re: Investment suggestions for spouse

Post by dbr » Sat Nov 16, 2019 11:52 am

Another option for fixed income is I bonds, but again it takes time to build anything quickly with the purchase limit. The other way to look at that is like the IRA, if you are going to do that you have to start now. People may also not want the complexity of having all those accounts.

Topic Author
NestEggLove
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Re: Investment suggestions for spouse

Post by NestEggLove » Sat Nov 16, 2019 12:03 pm

HomeStretch wrote:
Sat Nov 16, 2019 11:47 am
With zero earned income, aside from possibly funding a (spousal) IRA, the inherited funds would go into some type Taxable account(s)/investment(s). If spouse doesn’t have any other accounts and wants to have a bond allocation, then a Target Date Fund (TDF) or LifeStrategy Fund (LSF) in a Taxable brokerage account could be good simple choice.

The equity % of some TDFs decreases over time whereas the LSF % remains constant. As there are likely tax consequences for holdings changes in a Taxable account, be sure the TDF or LSF selected suits spouse’s asset allocation over her investing horizon.
Thanks homestretch, was originally thinking this way, still thinking ....

Topic Author
NestEggLove
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Re: Investment suggestions for spouse

Post by NestEggLove » Sat Nov 16, 2019 12:05 pm

dbr wrote:
Sat Nov 16, 2019 11:52 am
Another option for fixed income is I bonds, but again it takes time to build anything quickly with the purchase limit. The other way to look at that is like the IRA, if you are going to do that you have to start now. People may also not want the complexity of having all those accounts.
Thanks for your insight, DBR, will ponder...

Topic Author
NestEggLove
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Re: Investment suggestions for spouse

Post by NestEggLove » Sat Nov 16, 2019 12:12 pm

RickBoglehead wrote:
Sat Nov 16, 2019 11:49 am
NestEggLove wrote:
Sat Nov 16, 2019 11:38 am
Thanks, Delamer!
Had read about spousal IRAs, not sure we’ll go that route (plus the amount she’s dealing with is probably the six figure range), but thanks for the suggestion ! Will research into it.
You should strongly consider a spousal IRA up to the max for both 2019 and 2020. Yes, you can't eat the 6 figure balance, but every little bit helps in retirement.
Thanks “Rick”, was wondering off the top of my head how this can work, if you know.

Say my income is high enough to qualify me to cover both of us for an IRA, but I already have money tied up in my own workplace 401k/403B so that I can’t cover my spouse, can her inheritance $ be transferred to my bank account and be used by me as a spousal IRA for her ?
Maybe a dumb question ?

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mhadden1
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Re: Investment suggestions for spouse

Post by mhadden1 » Sat Nov 16, 2019 12:22 pm

RickBoglehead wrote:
Sat Nov 16, 2019 11:49 am
NestEggLove wrote:
Sat Nov 16, 2019 11:38 am
Thanks, Delamer!
Had read about spousal IRAs, not sure we’ll go that route (plus the amount she’s dealing with is probably the six figure range), but thanks for the suggestion ! Will research into it.
You should strongly consider a spousal IRA up to the max for both 2019 and 2020. Yes, you can't eat the 6 figure balance, but every little bit helps in retirement.
Does the spouse have any tax-advantaged accounts already? If so, they could hold some or all of a bond allocation, leaving the rest for tax-efficient investments, like total stock market/international in taxable accounts. And, adding to spousal IRA every year possible will build up to quite a bit over time. Plus, if spouse goes back to work, that may open up new new options, like rollovers to a 401k.

Ideally both spouses would align their investments to achieve a desired overall allocation, where the working spouse could likely adjust 401 allocation and contributions to account for the assets that the other has to hold in taxable. If married filing jointly, the tax consequences of the investments will fall on both, even though the assets are not combined.
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ruralavalon
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Re: Investment suggestions for spouse

Post by ruralavalon » Sat Nov 16, 2019 12:24 pm

NestEggLove wrote:
Sat Nov 16, 2019 11:02 am
Hi,
My currently unemployed wife (for a few years, but will probably go back to work) who is in her early fifties, has come into some money from an inheritance and sale of a deceased parent’s house.
She doesn’t have much money invested already, but wants to put a good chunk of what she’s newly come upon into investments —— moderately conservative, given age.

Correct me if I’m wrong, but the research I’ve done says she obviously can’t put it into a 401k/403b, and those proceeds don’t fall under “earned income”, so no IRAs.

So, that just leaves a non-retirement account ??
I was thinking a Vanguard Target Retirement fund, or one of their somewhat conservative Lifestyle funds —— would that be not a great idea for the bond portion in non-tax-advantaged ? But maybe that’s the best option in her situation.
She would definitely be the hands off type, and probably wouldn’t want me messing around with it too much either after it’s been invested. That’s why I’m thinking a balanced-type fund.

I have my own investments, but am thinking of us separately (though she’s the primary beneficiary) because she’s an individual that way 8-)

Thanks for any and all feedback !
She cannot contribute to a 401k or 403b.

She can open an IRA, it can be funded (when over age 50 up to $7k annually) based on your income but using cash from her inheritance or the house sale.

There are income limits for her eligibility to use an IRA. What is your tax bracket, both federal and state? What is your tax filing status?

What accounts and investments does she currently have? Please give fund names, tickers and expense ratios. It's usually best to coordinate investments among all accounts, treating all accounts together as a single unified portfolio, rather than viewing each account separately.

Please simply add this new data to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.

When she invests most of this new money in a taxable brokerage account she should use very tax-efficient stock index funds. Wiki article, "Tax-efficient Fund Placement" . Examples include Vanguard Total Stock Market Index Fund (VTSAX) ER 0.04% and Vanguard Total International Stock Index Fund (VTIAX) ER 0.11%.

Bond funds are not tax-efficient and ordinarily should be held in a tax-advantaged account, preferably in a tax-deferred account like a traditional 401k or traditional IRA.

If you are in a high tax bracket and she wants balanced fund, then a possibility for her to consider is Vanguard Tax-Managed Balanced Fund Admiral Shares (VTMFX), with a moderately conservative 50/50 asset allocation.
Last edited by ruralavalon on Sat Nov 16, 2019 12:39 pm, edited 3 times in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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JoeRetire
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Re: Investment suggestions for spouse

Post by JoeRetire » Sat Nov 16, 2019 12:29 pm

NestEggLove wrote:
Sat Nov 16, 2019 11:02 am
My currently unemployed wife (for a few years, but will probably go back to work) who is in her early fifties, has come into some money from an inheritance and sale of a deceased parent’s house.
She doesn’t have much money invested already, but wants to put a good chunk of what she’s newly come upon into investments —— moderately conservative, given age.
What would be the goal of this investment - retirement? something else?
While unemployed, does she need to be able to access any of these funds?
Don't be a lemming.

HomeStretch
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Re: Investment suggestions for spouse

Post by HomeStretch » Sat Nov 16, 2019 2:33 pm

NestEggLove wrote:
Sat Nov 16, 2019 12:12 pm
Say my income is high enough to qualify me to cover both of us for an IRA, but I already have money tied up in my own workplace 401k/403B so that I can’t cover my spouse, can her inheritance $ be transferred to my bank account and be used by me as a spousal IRA for her ?
Maybe a dumb question ?
Assuming your earned income is sufficient to contribute to Roth IRAs for you and spouse, your spouse’s Roth IRA does not need to be funded from your bank account.

If you don’t have the cash flow to make Roth IRA contributions, use funds from the inheritance or any other Taxable savings (where earnings are generally taxed each year) to contribute to the Roth IRAs (where earnings are tax free).

delamer
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Re: Investment suggestions for spouse

Post by delamer » Sat Nov 16, 2019 2:52 pm

HomeStretch wrote:
Sat Nov 16, 2019 2:33 pm
NestEggLove wrote:
Sat Nov 16, 2019 12:12 pm
Say my income is high enough to qualify me to cover both of us for an IRA, but I already have money tied up in my own workplace 401k/403B so that I can’t cover my spouse, can her inheritance $ be transferred to my bank account and be used by me as a spousal IRA for her ?
Maybe a dumb question ?
Assuming your earned income is sufficient to contribute to Roth IRAs for you and spouse, your spouse’s Roth IRA does not need to be funded from your bank account.

If you don’t have the cash flow to make Roth IRA contributions, use funds from the inheritance or any other Taxable savings (where earnings are generally taxed each year) to contribute to the Roth IRAs (where earnings are tax free).
Right. If you found $1,000 in coins in your sofa cushions, you could use that to fund her IRA.

It doesn’t matter where the money comes from as long as you qualify to make the contribution.

Topic Author
NestEggLove
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Re: Investment suggestions for spouse

Post by NestEggLove » Sun Nov 17, 2019 9:35 am

JoeRetire wrote:
Sat Nov 16, 2019 12:29 pm
NestEggLove wrote:
Sat Nov 16, 2019 11:02 am
My currently unemployed wife (for a few years, but will probably go back to work) who is in her early fifties, has come into some money from an inheritance and sale of a deceased parent’s house.
She doesn’t have much money invested already, but wants to put a good chunk of what she’s newly come upon into investments —— moderately conservative, given age.
What would be the goal of this investment - retirement? something else?
While unemployed, does she need to be able to access any of these funds?
Goal would be retirement. She’ll calculate what she thinks she needs while unemployed beforehand, and invest the rest for long term (15+ years)

Topic Author
NestEggLove
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Joined: Thu Jul 05, 2018 9:22 am

Re: Investment suggestions for spouse

Post by NestEggLove » Sun Nov 17, 2019 9:37 am

HomeStretch wrote:
Sat Nov 16, 2019 2:33 pm
NestEggLove wrote:
Sat Nov 16, 2019 12:12 pm
Say my income is high enough to qualify me to cover both of us for an IRA, but I already have money tied up in my own workplace 401k/403B so that I can’t cover my spouse, can her inheritance $ be transferred to my bank account and be used by me as a spousal IRA for her ?
Maybe a dumb question ?
Assuming your earned income is sufficient to contribute to Roth IRAs for you and spouse, your spouse’s Roth IRA does not need to be funded from your bank account.

If you don’t have the cash flow to make Roth IRA contributions, use funds from the inheritance or any other Taxable savings (where earnings are generally taxed each year) to contribute to the Roth IRAs (where earnings are tax free).
Thanks for clarifying, Homestretch. Great to know !

Topic Author
NestEggLove
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Re: Investment suggestions for spouse

Post by NestEggLove » Sun Nov 17, 2019 9:42 am

delamer wrote:
Sat Nov 16, 2019 2:52 pm
HomeStretch wrote:
Sat Nov 16, 2019 2:33 pm
NestEggLove wrote:
Sat Nov 16, 2019 12:12 pm
Say my income is high enough to qualify me to cover both of us for an IRA, but I already have money tied up in my own workplace 401k/403B so that I can’t cover my spouse, can her inheritance $ be transferred to my bank account and be used by me as a spousal IRA for her ?
Maybe a dumb question ?
Assuming your earned income is sufficient to contribute to Roth IRAs for you and spouse, your spouse’s Roth IRA does not need to be funded from your bank account.

If you don’t have the cash flow to make Roth IRA contributions, use funds from the inheritance or any other Taxable savings (where earnings are generally taxed each year) to contribute to the Roth IRAs (where earnings are tax free).
Right. If you found $1,000 in coins in your sofa cushions, you could use that to fund her IRA.

It doesn’t matter where the money comes from as long as you qualify to make the contribution.
Ha, thanks delamer ! Not so many pay phones to find change like the good old days !

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Stinky
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Re: Investment suggestions for spouse

Post by Stinky » Sun Nov 17, 2019 9:45 am

RickBoglehead wrote:
Sat Nov 16, 2019 11:49 am
NestEggLove wrote:
Sat Nov 16, 2019 11:38 am
Thanks, Delamer!
Had read about spousal IRAs, not sure we’ll go that route (plus the amount she’s dealing with is probably the six figure range), but thanks for the suggestion ! Will research into it.
You should strongly consider a spousal IRA up to the max for both 2019 and 2020. Yes, you can't eat the 6 figure balance, but every little bit helps in retirement.
I agree with the spousal IRA at the max for 2019 and 2020. And then plan to continue to contribute to the IRA every future year that she is eligible to do so.

Yes, it will only slowly eat into the balance of the inheritance. But the IRA will build up if she is able to contribute to it for a decade or more.
It's a GREAT day to be alive - Travis Tritt

Topic Author
NestEggLove
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Re: Investment suggestions for spouse

Post by NestEggLove » Sun Nov 17, 2019 10:09 am

mhadden1 wrote:
Sat Nov 16, 2019 12:22 pm
RickBoglehead wrote:
Sat Nov 16, 2019 11:49 am
NestEggLove wrote:
Sat Nov 16, 2019 11:38 am
Thanks, Delamer!
Had read about spousal IRAs, not sure we’ll go that route (plus the amount she’s dealing with is probably the six figure range), but thanks for the suggestion ! Will research into it.
You should strongly consider a spousal IRA up to the max for both 2019 and 2020. Yes, you can't eat the 6 figure balance, but every little bit helps in retirement.
Does the spouse have any tax-advantaged accounts already? If so, they could hold some or all of a bond allocation, leaving the rest for tax-efficient investments, like total stock market/international in taxable accounts. And, adding to spousal IRA every year possible will build up to quite a bit over time. Plus, if spouse goes back to work, that may open up new new options, like rollovers to a 401k.

Ideally both spouses would align their investments to achieve a desired overall allocation, where the working spouse could likely adjust 401 allocation and contributions to account for the assets that the other has to hold in taxable. If married filing jointly, the tax consequences of the investments will fall on both, even though the assets are not combined.
Thanks for the thoughts, mhadden !

Topic Author
NestEggLove
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Joined: Thu Jul 05, 2018 9:22 am

Re: Investment suggestions for spouse

Post by NestEggLove » Sun Nov 17, 2019 10:11 am

Stinky wrote:
Sun Nov 17, 2019 9:45 am
RickBoglehead wrote:
Sat Nov 16, 2019 11:49 am
NestEggLove wrote:
Sat Nov 16, 2019 11:38 am
Thanks, Delamer!
Had read about spousal IRAs, not sure we’ll go that route (plus the amount she’s dealing with is probably the six figure range), but thanks for the suggestion ! Will research into it.
You should strongly consider a spousal IRA up to the max for both 2019 and 2020. Yes, you can't eat the 6 figure balance, but every little bit helps in retirement.
I agree with the spousal IRA at the max for 2019 and 2020. And then plan to continue to contribute to the IRA every future year that she is eligible to do so.

Yes, it will only slowly eat into the balance of the inheritance. But the IRA will build up if she is able to contribute to it for a decade or more.
👍🏻
Thanks Stinky !

Topic Author
NestEggLove
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Re: Investment suggestions for spouse

Post by NestEggLove » Sun Nov 17, 2019 10:15 am

ruralavalon wrote:
Sat Nov 16, 2019 12:24 pm
NestEggLove wrote:
Sat Nov 16, 2019 11:02 am
Hi,
My currently unemployed wife (for a few years, but will probably go back to work) who is in her early fifties, has come into some money from an inheritance and sale of a deceased parent’s house.
She doesn’t have much money invested already, but wants to put a good chunk of what she’s newly come upon into investments —— moderately conservative, given age.

Correct me if I’m wrong, but the research I’ve done says she obviously can’t put it into a 401k/403b, and those proceeds don’t fall under “earned income”, so no IRAs.

So, that just leaves a non-retirement account ??
I was thinking a Vanguard Target Retirement fund, or one of their somewhat conservative Lifestyle funds —— would that be not a great idea for the bond portion in non-tax-advantaged ? But maybe that’s the best option in her situation.
She would definitely be the hands off type, and probably wouldn’t want me messing around with it too much either after it’s been invested. That’s why I’m thinking a balanced-type fund.

I have my own investments, but am thinking of us separately (though she’s the primary beneficiary) because she’s an individual that way 8-)

Thanks for any and all feedback !
She cannot contribute to a 401k or 403b.

She can open an IRA, it can be funded (when over age 50 up to $7k annually) based on your income but using cash from her inheritance or the house sale.

There are income limits for her eligibility to use an IRA. What is your tax bracket, both federal and state? What is your tax filing status?

What accounts and investments does she currently have? Please give fund names, tickers and expense ratios. It's usually best to coordinate investments among all accounts, treating all accounts together as a single unified portfolio, rather than viewing each account separately.

Please simply add this new data to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.

When she invests most of this new money in a taxable brokerage account she should use very tax-efficient stock index funds. Wiki article, "Tax-efficient Fund Placement" . Examples include Vanguard Total Stock Market Index Fund (VTSAX) ER 0.04% and Vanguard Total International Stock Index Fund (VTIAX) ER 0.11%.

Bond funds are not tax-efficient and ordinarily should be held in a tax-advantaged account, preferably in a tax-deferred account like a traditional 401k or traditional IRA.

If you are in a high tax bracket and she wants balanced fund, then a possibility for her to consider is Vanguard Tax-Managed Balanced Fund Admiral Shares (VTMFX), with a moderately conservative 50/50 asset allocation.
Original post adjusted, thanks RuralAvalon ! And appreciate your insight and advice !

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ruralavalon
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Re: Investment suggestions for spouse

Post by ruralavalon » Sun Nov 17, 2019 10:54 am

NestEggLove wrote:
Sat Nov 16, 2019 11:02 am
Hi,
My currently unemployed wife (for a few years, but will probably go back to work) who is in her early fifties, has come into some money from an inheritance and sale of a deceased parent’s house.
She doesn’t have much money invested already, but wants to put a good chunk of what she’s newly come upon into investments —— moderately conservative, given age.

Correct me if I’m wrong, but the research I’ve done says she obviously can’t put it into a 401k/403b, and those proceeds don’t fall under “earned income”, so no IRAs.

So, that just leaves a non-retirement account ??
I was thinking a Vanguard Target Retirement fund, or one of their somewhat conservative Lifestyle funds —— would that be not a great idea for the bond portion in non-tax-advantaged ? But maybe that’s the best option in her situation.
She would definitely be the hands off type, and probably wouldn’t want me messing around with it too much either after it’s been invested. That’s why I’m thinking a balanced-type fund.

I have my own investments, but am thinking of us separately (though she’s the primary beneficiary) because she’s an individual that way 8-)

Married filing jointly
5.9% state tax
12% federal

—-her investments, negligible to list here

Thanks for any and all feedback !
It looks like she is eligible to contribute to a traditional deductible IRA or a Roth IRA. The IRA should be at a low cost provider like Vanguard or Fidelity, for most people a traditional IRA is likely to be better. My suggestion is a traditional IRA at Vanguard.

The IRA contribution limit is $7k annually. She can contribute $7k now for the tax year 2019, another $7k in January for the tax year 2020, and repeat that every year to put the entire six figures in her IRA over several years.

It's important to make maximum use of available tax-advantaged accounts, so she sould not skip the opportunity to use an IRA.

For a simple moderately conservative investment in her Vanguard IRA she could use Vanguard Balanced Index Fund Admiral Shares (VBIAX) ER 0.07%, which is 60% stocks and 40% bonds.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

delamer
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Joined: Tue Feb 08, 2011 6:13 pm

Re: Investment suggestions for spouse

Post by delamer » Sun Nov 17, 2019 11:16 am

NestEggLove wrote:
Sun Nov 17, 2019 9:42 am
delamer wrote:
Sat Nov 16, 2019 2:52 pm
HomeStretch wrote:
Sat Nov 16, 2019 2:33 pm
NestEggLove wrote:
Sat Nov 16, 2019 12:12 pm
Say my income is high enough to qualify me to cover both of us for an IRA, but I already have money tied up in my own workplace 401k/403B so that I can’t cover my spouse, can her inheritance $ be transferred to my bank account and be used by me as a spousal IRA for her ?
Maybe a dumb question ?
Assuming your earned income is sufficient to contribute to Roth IRAs for you and spouse, your spouse’s Roth IRA does not need to be funded from your bank account.

If you don’t have the cash flow to make Roth IRA contributions, use funds from the inheritance or any other Taxable savings (where earnings are generally taxed each year) to contribute to the Roth IRAs (where earnings are tax free).
Right. If you found $1,000 in coins in your sofa cushions, you could use that to fund her IRA.

It doesn’t matter where the money comes from as long as you qualify to make the contribution.
Ha, thanks delamer ! Not so many pay phones to find change like the good old days !
My father always used to check the return coin slot when he walked by a pay phone to see if there was any money left behind!

Thanks for the memory!

Arbol
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Re: Investment suggestions for spouse

Post by Arbol » Sun Nov 17, 2019 11:22 am

The only retirement account that can be funded with her inheritance is a spousal IRA if you have earned income.

Being in the 12% federal tax rate is fantastic for LTCG. Your federal taxes on LTCG is probably zero. This is as good as a Roth IRA for gains but better than a Roth IRA since you can harvest losses in a taxable account.

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ruralavalon
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Re: Investment suggestions for spouse

Post by ruralavalon » Sun Nov 17, 2019 11:38 am

You said "the amount she’s dealing with is probably the six figure range", can you be more exact? As mentioned she can quickly (now and in January) contribute $14k to an IRA.

Then the question becomes "what to do with the rest"? It should not remain uninvested. In a taxable investment, the good news is that in the 12% tax bracket long term capital gains should have a 00% tax rate. Dividends or interest will be taxed at the rate of 12%.

Also what is her age?

About how much do you currently have in traditional tax-deferred accounts? Will either of both of you be eligible for a significant pension in addition to Social Security?

Again please add this new information to your original post using the edit button.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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