[Bill]

If you want very low risk, A stable fund at 2-3% is not the best option at this time.

You can get better than 4.4% in a 6-month treasury, 4.2% in a 1-yr Treasury, or a 4.1% in a 2-year Treasury.

If you think the money will be needed in the next year, I’d split it equally between the 6-month and 1-year, and in 6-months, when it matures put in a 1-year.

That way you have half of it maturing every 6 months. If something happens, and you need the money sooner, you can always sell the U.S.

Treasury, and might incur a very small loss or small gain since time to maturity is under 6 months.

[Kiana]

Wouldn’t it make more sense to put it in a high yield savings account with a 4. 4% rate? Am I missing something?

[Bob]

If you think they might need this money soon, while where to invest the money is important, you should come up with a plan to withdraw the money from the IRA as tax efficiently as possible.

As a married couple, they can have almost $130k of income in a year and still be in the 12% federal tax bracket.

We’re towards the end of 2024 so I would take as much as I could to max out the 12% tax bracket this year and then in 3 months, next tax year, do the same.

Not being sure about their income, but making a guess, that should put them in a position where if they needed the rest of the Inherited IRA, they probably won’t get put into the 22% tax bracket.

Yes, you can stretch the withdrawals out over 10 years, but the 12% tax bracket is only guaranteed for this year and next and if it’s a concern that they might actually need the money at their ages, it could be good to manage the taxes sooner at a low rate rather than waiting and get hit with higher taxes later on.

[Author]

Posts