Dad's TDA going to Mom's IRA

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Topic Author
BogBod
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Dad's TDA going to Mom's IRA

Post by BogBod »

My father passed away in February.

He had a Tax Deferred Annuity with Mutual of America ($219K).
It took them a while to send the forms to my mother as to what she can do next.

It appears that she can roll the TDA into her own IRA. (Are there any other preferred options, she should ask about?)

She could open an IRA at Mutual of America. She is an extremely conservative "investor" (Really "saver") and their Interest-Only account earns 3% now (3% max, 1% min).

Obviously, she could get 5% from SPAXX (now) if she opened an IRA at Fidelity and move the money there. And she would likely have more options. She is happy for me to help her, but repeatedly states that she does not want to burden me with extra tasks.

PROS and CONs of:
1. Easy button, open up an IRA at Mutual of America
2. Open IRA at Fidelity and transfer funds there. It seems like just completing sections of the same form differently. Any other anticipated differences or challenges?

Thanks. Oh, and the Mutual of America seems to automatically do the RMDs from my father's TDA. Would Fidelity do RMDs automatically for my mom or would that be done differently?
livesoft
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Re: Dad's TDA going to Mom's IRA

Post by livesoft »

How old is Mom?
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Topic Author
BogBod
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Re: Dad's TDA going to Mom's IRA

Post by BogBod »

livesoft wrote: Mon Jun 10, 2024 12:59 pm How old is Mom?
80 this year
livesoft
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Re: Dad's TDA going to Mom's IRA

Post by livesoft »

Does Mom have any IRAs of her own at any financial institution?

I have an inherited IRA at Fidelity. Fidelity tells me the RMD amount every year, but I am responsible for submitting a transaction to withdraw at least that amount during the calendar year. I can see that if one had an IRA with more than one fund within the IRA that any "automated" withdrawal might be complicated by which shares to sell to create the cash that is withdrawn.
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HomeStretch
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Re: Dad's TDA going to Mom's IRA

Post by HomeStretch »

Does your mom have a feasible option to exit the annuity and roll the tax deferred funds over to an IRA in her name at a low cost brokerage?
Topic Author
BogBod
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Re: Dad's TDA going to Mom's IRA

Post by BogBod »

HomeStretch wrote: Mon Jun 10, 2024 1:34 pm Does your mom have a feasible option to exit the annuity and roll the tax deferred funds over to an IRA in her name at a low cost brokerage?
Yes, she does.

She could open a rollover IRA at Mutual of America where my father's TDA was (easy button, fewer options)
She could open a rollover IRA at another financial institution (still easy but not as easy, more options, I think)

The essence of my post was to request the opinions of the forum as to which option appeared better to them. Thanks.
Topic Author
BogBod
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Re: Dad's TDA going to Mom's IRA

Post by BogBod »

livesoft wrote: Mon Jun 10, 2024 1:07 pm Does Mom have any IRAs of her own at any financial institution?

I have an inherited IRA at Fidelity. Fidelity tells me the RMD amount every year, but I am responsible for submitting a transaction to withdraw at least that amount during the calendar year. I can see that if one had an IRA with more than one fund within the IRA that any "automated" withdrawal might be complicated by which shares to sell to create the cash that is withdrawn.
Gotcha. Thanks for the info. Mom will likely have a bunch in cash equivalents. Since the RMD will likely be around 11K per year, she would have enough in cash for the distribution. I still appreciate the thought so that can see the big picture.
HomeStretch
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Re: Dad's TDA going to Mom's IRA

Post by HomeStretch »

BogBod wrote: Mon Jun 10, 2024 2:28 pm
HomeStretch wrote: Mon Jun 10, 2024 1:34 pm Does your mom have a feasible option to exit the annuity and roll the tax deferred funds over to an IRA in her name at a low cost brokerage?
Yes, she does.

She could open a rollover IRA at Mutual of America where my father's TDA was (easy button, fewer options)
She could open a rollover IRA at another financial institution (still easy but not as easy, more options, I think)

The essence of my post was to request the opinions of the forum as to which option appeared better to them. Thanks.
Consider Fidelity (or Schwab). Large low-cost brokerage with local offices. Also POA-friendly which is important should you ever become responsible for managing your mom’s account.
Alan S.
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Re: Dad's TDA going to Mom's IRA

Post by Alan S. »

Are you sure that this account is in an IRA? Because an IRA is already tax deferred, the term TDA is most often used to describe a non qualified annuity, or sometimes a 403b plan. If this annuity is an IRA annuity, that should be clear on any statement that you can locate. It makes all the difference when it comes to RMDs and rollovers. If not in a qualified account now, it cannot be rolled over to an IRA for Mom.

If the annuity is in an IRA account, and assuming father was also RMD age, Mom must complete father's 2024 RMD, and since he passed very early in the year, there is a good chance that he did not complete it. Or if he had other IRA accounts he might have completed his total RMD from the other account.

Also, be aware of the one rollover limit within 12 months. To avoid exposure to this limit it is more efficient to have Mom assume ownership of the inherited IRA (if an IRA), as this is a non reportable distribution, avoids withholding, and does not use up a rollover. This assumption of ownership can be done either before or after the inherited IRA is transferred to a new custodian.

Finally, since Mom will be filing single starting in 2025, it may make sense for her to do a small conversion (after the RMD is done) before year end to take advantage of her final joint filing year.
Topic Author
BogBod
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Re: Dad's TDA going to Mom's IRA

Post by BogBod »

Alan S. wrote: Mon Jun 10, 2024 3:04 pm Are you sure that this account is in an IRA? Because an IRA is already tax deferred, the term TDA is most often used to describe a non qualified annuity, or sometimes a 403b plan. If this annuity is an IRA annuity, that should be clear on any statement that you can locate. It makes all the difference when it comes to RMDs and rollovers. If not in a qualified account now, it cannot be rolled over to an IRA for Mom.
Yes, my father apparently had an Individual Retirement Annuity, which the representative at Mutual of America said could only be rolled over into an rollover IRA. I have their paperwork. It is clearly what is typical for their clients, i.e., rollover into an IRA with them OR rollover into an IRA with another institution.

https://www.mutualofamerica.com/individ ... nt-options
Alan S. wrote: Mon Jun 10, 2024 3:04 pm If the annuity is in an IRA account, and assuming father was also RMD age, Mom must complete father's 2024 RMD, and since he passed very early in the year, there is a good chance that he did not complete it. Or if he had other IRA accounts he might have completed his total RMD from the other account.
Yes, understood that the 2024 RMDs must be completed. He had not done that (was very ill since Thanksgiving).
Alan S. wrote: Mon Jun 10, 2024 3:04 pm Also, be aware of the one rollover limit within 12 months. To avoid exposure to this limit it is more efficient to have Mom assume ownership of the inherited IRA (if an IRA), as this is a non reportable distribution, avoids withholding, and does not use up a rollover. This assumption of ownership can be done either before or after the inherited IRA is transferred to a new custodian.

Finally, since Mom will be filing single starting in 2025, it may make sense for her to do a small conversion (after the RMD is done) before year end to take advantage of her final joint filing year.
Very helpful. I have to learn more about these concepts. I assume you mean a Roth conversion? Thanks for heading me in the right direction.
Alan S.
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Re: Dad's TDA going to Mom's IRA

Post by Alan S. »

Yes, a Roth conversion. This can be done only after Dad's 2024 RMD has been completed.
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