Author Topic: Inherited IRA Investment Options and Advice Please  (Read 3008 times)

EyeRA

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Inherited IRA Investment Options and Advice Please
« on: March 22, 2013, 03:35:01 PM »
Hi,

I'm new to the boards and investing.  I'm 33 and soon to be married, saving for wedding aside. 
I have about 40,000 in savings and was considering using  5,000 for 2012 IRA (Roth?) 5,500 for 2013 IRA.  Putting 14,000 toward mortgage and refinancing for lower rate. 


Salary 38,000
Mortgage 130,000  4.875%
Student Loan 9,000
Car paid

No other debt.  I have a very small simple ira.

I have a recent Inherited IRA account of about 60,000 that I want to transfer to Vanguard.
I was seeking advice on which funds to consider?  Target Retirement, 500 Index, Global Equity?
Is this an expensive market and would it be wiser to put it in a short term bond/index bond fund temporarily?  Or something else?

My goal is to save for retirement and to retire as soon as possible.
I know I need to expand my skills, knowledge and education to increase my income.  Cut down spending and increase my savings in order to retire at a desirable age.

Thanks for your consideration-

Undecided

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Re: Inherited IRA Investment Options and Advice Please
« Reply #1 on: March 22, 2013, 06:06:19 PM »
Regardless of what you decide to invest it in, make sure you understand the consequences of and timing requirements for making an RMD election or not, and titling the IRA as an inherited one.

Another Reader

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Re: Inherited IRA Investment Options and Advice Please
« Reply #2 on: March 22, 2013, 06:40:31 PM »
+1 to Undecided's comments.  The inherited IRA account must be liquidated over your remaining estimated life as set by the IRS.  The annual RMD percentage at 33 is very small, but it's always wise to keep a couple of years of RMD's in cash.  The remainder can be invested as you would other tax deferred accounts.  The IRA's are a great idea and in your shoes I would use savings to invest in them. 

Do you need to pay down the mortgage to refinance?  If so, I would do the same thing in your shoes.  What about the student loan?  What's the interest rate?  Look into paying that off as well in the near future.

EyeRA

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Re: Inherited IRA Investment Options and Advice Please
« Reply #3 on: March 23, 2013, 11:44:35 AM »
Thanks for the comments.

We transferred the IRA into our own accounts and they are titled Inherited IRA with fidelity.  I know I need to take my RMD by Dec. 31 the year following the Decedents death because they were under 70 and did not start taking RMDs yet.

Yes I lost some equity in my home and need to pay down so I will not need PMI.

Student loan is 5% and I am making extra payments

Does it matter so much which fund I choose?  Or just pick a Vanguard Index fund.  Is that bad logic going for a more passive fund temporarily and an attempt to time the market?

Thanks-

Another Reader

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Re: Inherited IRA Investment Options and Advice Please
« Reply #4 on: March 23, 2013, 12:04:11 PM »
If the inherited IRA is with Fidelity, look at some of the Spartan funds they offer.  The expenses are very low.  Thjey have a few actively managed funds that have outperformed index funds as well.  I prefer Fidelity to Vanguard for customer service.

The inherited IRA needs to be in a separate account.  The Fidelity people should have set that up without you having to ask.

I think you are on the right track - lowering your housing expense and paying off debt.  Whoever made you their IRA beneficiary gave you a wonderful gift.  That $60k will give you a boost to your FIRE because it will compound over time and then the RMD's will kick in in a bigger way before your own retirement accounts do.