Ah…that is likely why I will have my RMD amount done in December with taxes taken out to cover that. Right?
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@Youdon_tsay H had to complete that form to avoid the penalty on underwithholding – it’s Form 2210 and Schedule AI (worksheet that’s within 2210). If you got the income in the last quarter, you may not owe a penalty, but you have to do the worksheet.
H did this in Turbo Tax, so I think a lot of the numbers were populated automatically, as it pulled down Vanguard and his W-2 when setting up for doing the return. We had to report income by quarter on Schedule AI and H included the cap gains in the 4th quarter. We fiddle with our W-4 withholding during the year so we are always pretty close to the real amount of income.
For us, it was end-of-year cap gains and my tiny pension payments that caused us to make a tax payment in January, but he had to show that the gains were considered income to us in December. We don’t do advance withholding on either of those, mainly because we never know what taxable cap gains will be in any given year.
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I’ll get him to go back and see whether he can access the return and that form. Thanks.
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The 10-year rule does not apply to IRAs that were inherited prior to 2020, however.
This article discusses the different permutations well:
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Okay, I give up. I know nothing. This thread is impossible. Thanks for the responses to my question.
@Sabaray, you were correct on your post upthread. You can always put your non-spousal IRA distributions into a regular personal account at Vanguard/Fidelity, a CD, I Bonds, with an investment advisor, etc. Just can’t go into another IRA of any type. If you want to keep it segregated from marital assets, it should be in an account in your name only and don’t use it on joint expenses/jointly-titled assets.
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Some of you know me from other threads. DH died in January and I’m working through all the financial stuff. I was pretty savvy before but this amount of paperwork is stunning.
Where this fits in the retirement thread, is the transition to retirement and retirement funds.
In 2023 H was working, had a military pension, and then had both short term and long term disability. I am still working but am trying to decide if I am ready to retire.
When notified of his death, the feds clawed back his January payments, and the employment-contracted disability company (WEX) paid 3 more days to pay to the date of his death. The feds have not yet (re)paid for January 1 to the date of his death, nor have they started my survivor pension.
When I called WEX, they stopped the disability payments and offered me 3x his monthly disability to close the Social Security Disability Claim that was open. (I took the WEX check). Had the claim gone through, WEX would have paid less each month due to the SSD payments.
Later, I received a letter saying they no longer were representing me/him. Then I received a letter from SSD saying he had qualified and I should apply for back payments.
**Does anyone have experience with this? I suspect WEX will claw back if I apply for the back SSD benefits.
I’m gathering a list of questions to ask our attorney. I’m meeting with our advisor at Fidelity later this month.
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I have zero experience here to help but am hopeful that this large and varied group will be able to offer some guidance. My reply here is to give encouragement and to say I am impressed you were able to make so much progress so far sorting out things to this point.
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I also know nothing on this topic.
Have you posted on Bogleheads? The site slants more male with lots of discussion of retirement, so you might find someone there who has encountered this before.
Sorry for your loss.
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We have two small Roth IRA CDs that are earning tiny amounts of interest. They are both over 5 years old and we are both over 59 1/2 yrs old. Our bank no longer offers Roth CDs, just Roth savings that only pay .35%.
Should we (a) just close them down and put the $$ into regular CD’s which are paying at least 5%, or (b) move the money to another bank that still offers Roth CD’s that pay a decent rate of interest.
The 2 accounts contain less than $3K each.
If these were mine, I’d move them somewhere else. Will you be considering ROTH conversions down the road? Can they be combined? (i.e. both owned by the same person?). Would it be helpful to you to have ROTH “buckets” ready for converting into?
In general, the recommendation for a Roth is to go with high growth investments, so I’d roll them into a brokerage account and buy Total Stock market. Can you add to them? Convert a tIRA?
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My concern about moving them to a Roth at another bank is whether or not the 5-year clock starts all over again. We are in our late-60s, and each account is very small–as I said, less than $3K in each.
Since they are more than 5 years old, are small, and we are well over 59 1/2, my gut tells me to just close them out and put the money into regular CD’s. We don’t have stock or brokerage accounts—our finances are very simple.
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Please check, but I’m pretty sure that a direct rollover to another institution is NOT a trigger that restarts the 5 year clock. But if the amount is a small enough percentage of your assets, any path you choose will probably work out fine…
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Can’t you cash them out and then put them in some high-yield account or brokerage account that’s earning 5%? We opened our first brokerage account at Vanguard a couple of months ago to get 5+%. It was easy peasy. A CD would be fine, but the money is locked up for a period of time. I just noticed lat week that I can get a CD at my credit union making about what my brokerage account is making, but the money would be tied up in a CD for 18 months or something like that.
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I never heard of a “Roth CD”, only CDs which can be owned by a Roth IRA or a traditional IRA. I’m puzzled that this bank won’t let you buy a CD in the Roth
In any case I think banks are terrible places to keep IRAs. My recommendation would be to get them transferred to a company like Fidelity, Vanguard, Schwab, or the like, and at the very least park them in a money market paying 5+%.
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Yea, I was gonna suggest considering a cash out. As we get older, my husband and I find that Simplification is part of our game.
I liked the Bogleheads suggestion. I have not used it much, but there does seem to be a huge following, lots of info. Good for you to be on top of the survivor pension - that will be key to your future planning.
Any kind of account can have a Roth designation, be it a CD, a savings account, a money market fund, a stock fund, etc.
YES–exactly. I proposed two simple options, and I am receiving many well-intentioned suggestions that would unnecessarily complicate our financial situation. We are almost 70 and have done quite well without complicated brokerage dealings. We’re just not the kind of people who see the need to squeeze every last penny out of our investments—just not interested in all the work that involves.
We have a government pension that is funding our retirements very comfortably, so the need to save a million or more dollars for retirement was neither necessary nor likely to happen.
Add to that, we are very very risk-aversive. I like the safety of banks, despite what others think of banks.
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