Edward Jones Inherited IRA

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Topic Author
HumbleWanderer
Posts: 2
Joined: Mon Jun 20, 2022 6:54 am

Edward Jones Inherited IRA

Post by HumbleWanderer »

Hello All!

I have read Bogleheads for a few years but this is my first post.

My Brother and I recently inherited an IRA that is held at Edward Jones (non spousal). We would like to transfer everything to another broker. The Ira is set up to look as complicated as possible (a hundred or so different stock holdings , some with only 2-3 shares, some mutual funds etc). I have searched the forum and read some similar situations. This would fall under the rules of the new secure act. I have a few questions and am looking for advice on the best way to move forward.

1)What is the best way to converse with Edward jones, Email, phone, in person? I do have the contact number of the account/investment representative.

2)Is there anything I should do before contacting Edward jones (I have access to the account, are there any pertinent records I should print/save)?

3)Based on forum search, should all of the current holdings be sold and then transferred into a new account for each of us, and then have our broker initiate a transfer? Would it be better to just transfer the holdings into the new edward jones accounts? Will Edward Jones charge a fee to sell each stock holding? My brother and I are quite amicable and if the account was not split exactly 50/50 there would be no issue at all.

4) When does the Ira need to be fully withdrawn? The owner passed away in 2022.

5)Any tips to minimize taxes, I plan to maximize Tsp contributions?

Thank you!
mkc
Posts: 1352
Joined: Wed Apr 17, 2013 2:59 pm

Re: Edward Jones Inherited IRA

Post by mkc »

HumbleWanderer wrote: Mon Jun 20, 2022 7:16 am Hello All!

I have read Bogleheads for a few years but this is my first post.

My Brother and I recently inherited an IRA that is held at Edward Jones (non spousal). We would like to transfer everything to another broker. The Ira is set up to look as complicated as possible (a hundred or so different stock holdings , some with only 2-3 shares, some mutual funds etc). I have searched the forum and read some similar situations. This would fall under the rules of the new secure act. I have a few questions and am looking for advice on the best way to move forward.

1)What is the best way to converse with Edward jones, Email, phone, in person? I do have the contact number of the account/investment representative.

2)Is there anything I should do before contacting Edward jones (I have access to the account, are there any pertinent records I should print/save)?
EJ will need to split the IRA into one for each of you. That will need to be done first. IRAs are individual-owner accounts so the account you are inheriting has to be split.

After that's complete, don't contact Edward Jones.

Download/print out the current holdings.

The brokerage you choose to transfer to will take care of things. You'll just need account numbers. They may need a copy of the most recent statement to make sure everything can transfer in-kind.

Selling within an IRA is a non-taxable event, as long as the funds stay in the IRA.

Note that if the person who has passed did not take their 2022 RMD, you will need to do so.
bloom2708
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Location: Fargo, ND

Re: Edward Jones Inherited IRA

Post by bloom2708 »

Have Edward Jones split the IRA.

Instruct them to sell whatever high expense ratio funds are in the account. Get the money in the settlement fund.

Contact Vanguard or Fidelity or Schwab. They will pull the funds to them.

Do not contact EJ about the transfer. You can try not selling the funds first, but most likely you do not want to transfer the junk in the IRA.

You have 10 years to withdraw the amounts in the inherited IRA. Amounts withdrawn are income and will be taxed at your marginal tax brackets. Wherever you are based on your earnings for the year.

Good luck.
"We are here to provoke thoughtfulness, not agree with you." Unknown Boglehead
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retired@50
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Re: Edward Jones Inherited IRA

Post by retired@50 »

HumbleWanderer wrote: Mon Jun 20, 2022 7:16 am My Brother and I recently inherited an IRA that is held at Edward Jones (non spousal).

4) When does the Ira need to be fully withdrawn? The owner passed away in 2022.
Welcome to the forum. :happy
This wiki page may clear up some of the questions about an inherited IRA.

See link: https://www.bogleheads.org/wiki/Inheriting_an_IRA

Keep in mind that the Edward Jones representative may discourage the transfer. It's typically best to contact the firm that you've chosen as the destination for the new inherited IRA and work with them by providing the EJ account number. Let the chosen firm initiate the transfer.

Your decision to transfer really doesn't need your rep's approval, and avoiding the discussion until after the fact may seem like a slight to the rep, but it also prevents you from having to listen to the doom & gloom speech he/she has prepared to warn you away from leaving.

Regards,
This is one person's opinion. Nothing more.
niagara_guy
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Joined: Tue Feb 11, 2020 8:32 am

Re: Edward Jones Inherited IRA

Post by niagara_guy »

I would converse with EJ via email so there's a written record. I would send an email “here is what we talked about in our meeting” if I talked to them in person or by phone and i would put in all the details.

Will EJ charge you to sell the individual stock holdings? Will EJ charge a fee to move those individual stock holdings to another brokerage? I would want to know all the EJ fees before I pulled the plug or took any actions.

I have no experience with an inherited IRA, but I would ask EJ how they are going to split it (assuming it has to be done at EJ). There might be ways to keep the fees low for the split. Some companies will charge high fees for things like opening a new account (I have experienced this).

If I had to do the split at EJ I would do it without telling them I was heading for the exit. In my opinion you owe EJ nothing. They have charged fees to the person you inherited the IRA from over the years.

I think some brokerage houses will pay those fees for you, might be good to check. I would talk to all 3 (Vanguard, Fidelity, Schwab) to see what fees they will cover from EJ and to see what assets can be moved in kind. Ask them for the details of how to move the account from EJ, they want your business. And they won't be charging you high fees and high fund fees so you might save 2% per year.
BBurki
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Joined: Fri Jan 07, 2022 11:47 am

Re: Edward Jones Inherited IRA

Post by BBurki »

I recently inherited an IRA . I can't answer all your questions, but I can share some things that I did that might be useful. (BTW, it wasn't in EJ so I can't speak to that part of your post.)

After rolling over the IRA to an account at Fidelity...

I consolidated all my fixed income holdings in the inherited IRA (FXNAX in my case). All my other accounts are now 100% equities.

The reason you want to get all your fixed income into the inherited IRA (if you can) is because you have to have it emptied out within 10 years of the original owner's passing. So of all your accounts, you want that one to grow the slowest. (Whether or not your situation allows you to do this depends on how big the inherited IRA is, your current age, your chosen asset allocation, and probably some other things that I'm not thinking of.)

Fidelity helped me set up a monthly distribution from the inherited IRA that will (hopefully) have it empty or close to empty in 10 years. You probably don't want to empty it out all in one lump sum because the taxes may kill you (depending on the size of the IRA).

I max-out my yearly 401k, HSA and Roth contributions ($27,000, $4,650 and $7,000 in my case), and use the IRA distributions to make up for the loss in monthly income.

This effectively redirects the IRA distributions into the above mentioned accounts.

Hopefully at least some of that was helpful.

Cheers!
R7000
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Joined: Mon Sep 18, 2017 4:51 pm

Re: Edward Jones Inherited IRA

Post by R7000 »

I also had an inherited IRA at Edward Jones and I did exactly what BBurki is saying, I used this IRA as part of my bond holdings as it will come out as regular income and you don't want any potential high growth holding being taxed like that. I put it in a short term bond ETF.

I though of it as the exact opposite of a Roth IRA. Roth comes out tax free so growth is OK/desired.
Inherited comes out fully taxed, so allocate it to the slow lane.

My 2 cents.
radiowave
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Re: Edward Jones Inherited IRA

Post by radiowave »

I had a similar situation several years ago and moved my portion of my dad's IRA to Vanguard. Initiated the transfer from VG side and moved all funds in kind. Everything worked well and I didn't have to interact with the EJ Financial Advisor directly. I did get hit with a $95 account closure fee but after looking at a similar mess of high fee/expense ratio funds, well worth the effort.

Someone above mentioned working with the EJ rep to sell some funds . . . if you can move everything in kind to the new broker without any fees that may be worth considering.
Bogleheads Wiki: https://www.bogleheads.org/wiki/Main_Page
Bronco Billy
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Joined: Tue Jan 23, 2018 11:27 pm

Re: Edward Jones Inherited IRA

Post by Bronco Billy »

If like my dads we had to wait until the lawyer his thing with the trust. My dads had to be split 3 ways and EJ sold all funds and stocks to divide into 3 equal shares. I didnt know better and not sure if EJ bought back or we told him to buy back. I am not sure if we all had to pay the front load fee again when he bought the funds back. If i was going to transfer to another brokerage house i would just leave it in cash...might stop the bleeding for a while. I called my EJA and told him i was going to transfer the Brokerage to Fido and would he do it... He told me it should not be a problem for ME to do it. So I DID. My plan was to leave the inherited IRA at EJ for my kids but now considering transfering it also to Fido.
dmon
Posts: 21
Joined: Fri Dec 31, 2021 1:52 pm

Re: Edward Jones Inherited IRA

Post by dmon »

My wife recently transferred a non-spousal, inherited IRA from TIAA to Vanguard, and the process was similar to what radiowave and others have described.

I would add that the process took about 6 weeks -- which was longer than I thought it would. Everything had to be done via fax or mail, with no online forms to submit. And we had to make sure that the Vanguard IRA was titled correctly (decedent name must appear in the title and it should also indicate that it is an inherited or beneficiary IRA)
Topic Author
HumbleWanderer
Posts: 2
Joined: Mon Jun 20, 2022 6:54 am

Re: Edward Jones Inherited IRA

Post by HumbleWanderer »

BBurki wrote: Mon Jun 20, 2022 3:37 pm I recently inherited an IRA . I can't answer all your questions, but I can share some things that I did that might be useful. (BTW, it wasn't in EJ so I can't speak to that part of your post.)

After rolling over the IRA to an account at Fidelity...

I consolidated all my fixed income holdings in the inherited IRA (FXNAX in my case). All my other accounts are now 100% equities.

The reason you want to get all your fixed income into the inherited IRA (if you can) is because you have to have it emptied out within 10 years of the original owner's passing. So of all your accounts, you want that one to grow the slowest. (Whether or not your situation allows you to do this depends on how big the inherited IRA is, your current age, your chosen asset allocation, and probably some other things that I'm not thinking of.)

Fidelity helped me set up a monthly distribution from the inherited IRA that will (hopefully) have it empty or close to empty in 10 years. You probably don't want to empty it out all in one lump sum because the taxes may kill you (depending on the size of the IRA).

I max-out my yearly 401k, HSA and Roth contributions ($27,000, $4,650 and $7,000 in my case), and use the IRA distributions to make up for the loss in monthly income.

This effectively redirects the IRA distributions into the above mentioned accounts.

Hopefully at least some of that was helpful.

Cheers!
That makes a lot of sense. Thank you for posting that. I was going to do the exact opposite, and invest it fully in equities, but now it will be fixed income.
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