What to do with inheritance? (Favorite tax-efficient funds?)

[Rukh O'Rorke]

Jul 28, 2023 8:20:00 GMT -5 lurkyloo said:

Jul 27, 2023 14:54:42 GMT -5 soupandstew said:

That's a lot of progress - I know the IRA thing has been hanging over you for a bit.  

It’s a mental block.  I have Dad’s car, the family farmland, the carved bedroom set my great-great grandparents bought for my great-grandparents, the Swiss army knife he used to clean his pipe, a million other remembrances.  It shouldn’t be this hard; asset allocation for an 80yo is not the same as for mid-40s and some of the stocks could be mildly problematic for me or DH in terms of disclosing them at work.  Still.  I was perfectly happy not having the responsibility.    Then I justify procrastinating with super weak reasons. 
I appreciate the support 

[haapai]

May 11, 2023 18:05:09 GMT -5 lurkyloo said:

I also feel super guilty trying to work out my first world problems here.  Sorry, all.

There is absolutely no reason to apologize.  Do you have any idea how helpful this thread is going to be for most of us?  Almost all of us will one day either have to deal with an inherited traditional IRA or 401(k) or counsel someone who has.  Having even the slightest exposure to this in advance is going to be tremendously helpful. 

[lurkyloo]

Aug 6, 2023 12:57:23 GMT -5 haapai said:

May 11, 2023 18:05:09 GMT -5 lurkyloo said:

I also feel super guilty trying to work out my first world problems here.  Sorry, all.

There is absolutely no reason to apologize.  Do you have any idea how helpful this thread is going to be for most of us?  Almost all of us will one day either have to deal with an inherited traditional IRA or 401(k) or counsel someone who has.  Having even the slightest exposure to this in advance is going to be tremendously helpful. 

So far my advice is “be prepared for everything to take forever   “

[snapdragon]

What ended up happening with me is C-19 had just started and Dad came home to pass. In that time, his Finance guy came to the house and actually met with both Dad and I. It's one of the reasons I have stayed with him even though he is out of my way. Things had progressed to where the corporate offices had told them not to do personal meetings. Just a really decent person and we each bring something to the table on managing what I inherited. Right after Dad passed is when lockdown really went into effect for my state. 

"So far my advice is “be prepared for everything to take forever “"

It took about 18 months for things to finish out and I still ended up having to do a double probation. Dad's old lawyer never probated when my stepmom K passed 5 years before so that had to be done also. She was still on the house title and that was a joy.

[haapai]

Liz's reader question for this week is about inherited IRAs.  They're definitely getting some attention now. 

[lurkyloo]

Aug 7, 2023 15:36:02 GMT -5 haapai said:

Liz's reader question for this week is about inherited IRAs.  They're definitely getting some attention now. 

I wonder how long ago she wrote this?  I see the pub date is today, but they recently extended the grace period on RMDs through 2023 and it looks like she might’ve written the response before then.

snapdragon I am sorry for your loss as well.  Glad your dad’s guy was willing to come do in person. Mine was not really competent to manage his own affairs for the last year and a half of his life, but he had left things mostly in order, give or take an incompetent estate attorney.

It’s been just under 18 months since Dad died; the estate is a little complicated.  The first distributions were property in June, and at this point I’m a little nervous about having everything complete in 2023.  Still waiting on a deed for the FL condo…need to call my cousin’s dad about the farmland sooner than later.

Today, besides noting the HSA apparently beginning the rollover and opening DS’ UTMA account I tried to call the foundation that administers the scholarship fund my grandparents set up, currently dormant.  Didn’t actually get through to anyone helpful but hey, it’s a start.  Also noted that the bIRA has not moved yet; request submitted Thurs 7/27.

[wvugurl26]

Unfortunately I have to second lurky's advice of be prepared to wait and wait some more. And patience is not my strong suit in these situations. My grandma's estate is far smaller and less complicated and it is still taking far too long for me. She passed in February and I had hoped to close probate by the end of August. That is not happening. With any luck it will be the end of October. If it drags into 2024, it is going to be tough for my mental state.

[haapai]

I had no idea that it could take that long for an HSA to be distributed.  How irritating!  How is anyone supposed to do any decent tax planning when they can't predict when that taxable amount will land on them? 

Can you tell me anything more about the process?  Specifically does the executor have to sign off on the distribution (probably stating that there are no expenses of the deceased that could be paid from the HSA)?  Or is the delay due to the beneficiaries not doing the paperwork promptly and therefore somewhat under their control?  Is this situation complicated by a beneficiary refusing the inheritance or dying before your dad? 

My HSAs currently have a balance that will probably send the beneficiary into a tax bracket that he's never seen before and his options for mitigating the tax bite are limited to traditional IRA contributions.  I've warned him that he'll need to file quarterly taxes if this lands on him but do I need to tell him more about when to expect it or how to time it optimally? 

[TheOtherMe]

Mom's estate was easy as she left everything to dad.  I made the calls to get her name off of things and to stop her pension, etc.  I sent off for the form for dad to change the beneficiaries on his pension.  Once we had the death certificate, it went to the bank and her name was taken off of the bank accounts and her IRA "distributed" to him.  Then the bank had him change the beneficiaries to us.  

Dad's was more complicated because of certain wording involving my half sister in his will.  As soon as the life insurance company received the death certificate, that was distributed.  

The attorney my sister hired thought we should be conservative in case my sister contested the will, so he didn't let any of the funds be distributed until after the notice periods to contest were over.  

Covid had just started and the courthouse was closed.  The judges were picking a day to sign off on probate work.  Since dad's daughter didn't live in state, he mailed copies of the notices that were in the paper to her.  After that time passed, he let the IRA be distributed to my sister and myself.  

Then we waited and waited.  There were forms to be filled out and a computation to make because it was a small estate under Iowa law.  

My sister, the executor, didn't even understand that I was paying the bills she sent me from the account that I had been using to pay his bills for the last couple of years.  I don't know how she thought the bills were getting paid.

There was an account for the Estate itself and all the CD's had been rolled in to that account.  She emails me a copy of the "accounting" and it doesn't have any information on the account I was paying bills from.  

The attorney didn't think my half sister would cash a check and didn't want to have the Estate account left open.  With that amount in it, we would have been incurring fees to maintain the account.  So he talked to one of the judges and explained the situation.   She had not signed and returned any acknowledgements of anything. 


Judge finally agreed to sending cash with an explanation letter and the acknowledgements by certified mail.  Then we had to wait for the judge to sign off on the agreement. 

While I was better qualified than my sister to be the executor, I'm glad it was her name on everything and not mine.  

My half sister and I still exchange Christmas cards and I sent her photos I found of her when she was a baby,  She did send me a thank you for the photos.  

The phone number I had was no longer in service when I went to call her to tell her dad died.  Obviously, they were not close.  I even paid for a background service to find a cell phone number or email address.  Email bounced.  Cell phone number was not in service.

So she doesn't refuse my mail but she never says more than Merry Christmas or Happy Birthday.  I do wish that could be different.
 

[TheOtherMe]

When I redid my will with an attorney rather than a DIY will, the attorney says the DN1 should decline being the executor if he is still living out of the country.  

[lurkyloo]

haapai Sorry, the HSA is my own, just rolling it over from its old, distinctly mediocre custodian to fidelity.  I tried to do it through fidelity, got a message a month later that benefit wallet wouldn’t talk to them, went through and dug out the form and mailed it.  It took them almost three weeks from date of mailing to transfer.  I also had to move the invested portion back to the checking account at BW.

Trying to get all my ducks in a row…they are just very, very slow ducks that get distracted a lot 

[lurkyloo]

Still no appearance of funds in the new hsa, or movement on the bIRA.  Emailed the current ira trustee to ask whether they’ve heard anything on their end, and whether I need to manually sell the holdings in it first.

Rukh wins-I was annoyed that the taxable account was showing capital gains and now I’m annoyed that it’s lost value    I think the one holding can likely be rolled over in kind to Fidelity; the other one I’ll need to sell and then repurchase.  Was not really expecting there to be such a delay on fund transfers though.  

[lurkyloo]

Current trustee has not received a request from Fidelity.  Fabulous. 

[lurkyloo]

Called Fidelity and had to re-initiate the IRA transfer since they’d lost it    The good news is the HSA transfer finally showed up.  I also confirmed that I can roll over in kind and since it’s a transfer of custodian and not a buy and sell transaction there will be no capital gains or anything-not important for the IRA but very relevant for the taxable account which comes next.  I’ll worry about that next week. 

[lurkyloo]

Transfer request for IRA received by original custodian    I am thinking it might be better to sell out of taxable investments, transfer the money and then buy the investments I want rather than try to transfer the capital gains basis between custodians.  With the recent slight downturn the capital gains should be pretty minimal, and I want a different investment anyway.  Thoughts/prior experiences?

[haapai]

Aug 11, 2023 10:37:46 GMT -5 lurkyloo said:

Transfer request for IRA received by original custodian    I am thinking it might be better to sell out of taxable investments, transfer the money and then buy the investments I want rather than try to transfer the capital gains basis between custodians.  With the recent slight downturn the capital gains should be pretty minimal, and I want a different investment anyway.  Thoughts/prior experiences?

I have some thoughts but they might turn out to be silly. 

Maybe, just maybe, you should find a financial professional that can knock this question out of the park. 

[lurkyloo]

Aug 11, 2023 11:54:22 GMT -5 haapai said:

Aug 11, 2023 10:37:46 GMT -5 lurkyloo said:

Transfer request for IRA received by original custodian    I am thinking it might be better to sell out of taxable investments, transfer the money and then buy the investments I want rather than try to transfer the capital gains basis between custodians.  With the recent slight downturn the capital gains should be pretty minimal, and I want a different investment anyway.  Thoughts/prior experiences?

I have some thoughts but they might turn out to be silly. 

Maybe, just maybe, you should find a financial professional that can knock this question out of the park. 

In theory, it should be fine.  In practicality, I’ve seen people complain about records and new custodians losing track of cost basis.  This is more a keeping track of paperwork and heading off likely paperwork headaches question than a financial advice question so I suspect the bogleheads board are a better source of advice than a financial professional.  The main risk is an extra couple of days out of the market, but that could go either way-if the fund price goes down while out of the market then I missed out on losing money    

Update: Broker at the office suggested a couple different workarounds but agreed it wasn’t a terrible idea.  They’ll sell at today’s closing price because mutual fund; I opened the brokerage account at Fidelity and I’ll submit the transfer request Monday night.  This locks in a couple grand in capital gains, mildly annoying but I guess extra money is good.

[lurkyloo]

I think I’m going to go ahead and transfer assets directly next time, since this winds up being about a week out of the market.  Then again, just as happy to have some money miss today’s stock bloodbath 
Got an email this morning that they couldn’t complete the bIRA transfer because the JP Morgan money market fund of all things wasn’t available as an investment choice at fidelity.  Called the custodian and had them sell it; new estimate is that the rollover will complete on Friday.

I did fiddle around long enough to figure out how to look at tax lots for specID on TIAA-turns out you have to start a redeem shares transaction to get that info.  Also interesting: a large chunk of that holding dates from before they started tracking the cost basis for you.  Good news:  I am a packrat and almost certainly have paper copies of confirmations…somewhere    There is a batch of about 120K worth from 2007 which must be a conglomeration from the prior 6-8 years. I filled out a LOA to donate about 22K to my grandparents scholarship fund, after calling and talking to the administrators…although maybe I’ll take a dive through that particular stack of paper to double check that the lot I chose isn’t the only lot I have a record of cost basis for.  Backup plan is still to die with it as part of my estate to get the step up in cost basis 

[lurkyloo]

UTMA funds finally released so I can start investing those    bIRA rollover also happened, except it’s missing the MMF sale proceeds so I guess I get to see whether those roll on their own or I have to submit another request.    I swear babysitting these moves that ought to be automatic is driving me bonkers.

I can easily locate cost basis records going back to 2006 but have not located the ones prior to that so probably I need to redo the LOA on the donation so I can get the non-recorded ones out of my hair.  I guess it’s good news I figured out I actually do need some of those dusty old files?  Score one for the packrat tendencies…suck it, Marie Kondo  

Need to either sell or disclose some precious metal holdings.  I could maybe roll them over into non-problematic substantial equivalents in the bIRA (not a great time to sell) but I think I’d run afoul of wash sale rules if I do it on the taxable side.

[lurkyloo]

Re-initiated the bIRA transfer to get that last 50K out    Today I started the process of dollar cost averaging back into the market-it’s been so choppy lately that I just don’t want to do it all at once.  I also diverted 6500 of the taxable over to a tIRA and will look to convert that to Roth as soon as it settles.

Redid the donation docs to reflect the problematic tax lots instead of the one I think I have a cost basis record for    Will try to mail that tonight.  Still need to call TIAA and turn off capital gains reinvestment but I figure I have until end of Nov for that.

And, still haven’t made contact with the semi-relative I need to talk to about the farmland-not an immediate need since it’s a fallow year but crop insurance needs to be sorted by end of Sept.  Still waiting on the deed to FL condo.

[lurkyloo]

Roth conversion done, still need to d*mp it into the market.
Have invested about 20K in VTI and 10K in a state muni bond fund in taxable, leaving about 85K in MM and not accounting for any bIRA distributions.
Sold half a silver holding on Fri  (~9K) which naturally is up 2% today 
Mailed the updated donation paperwork to TIAA on Sat.
I thought I had invested 10K in VTI from my taxable Thursday…turns out the purchase happened from the UTMA account.  Dammit.  Thursday morning wasn’t a great time to buy and I’d planned to DCA DS’ money in.   I’ll assess the damage in a couple of months and decide whether I should top up his account to offset my mistake.  Anyway, he’s about 50/50 VTI/MM right now which is fine.

bIRA has significant positions in bonds and precious metals.  It’s a crappy time to sell bonds so I might just let those ride for a while-thankfully they’re weighted toward short term.  Right now I’m going to focus on selling the problematic/disclosure needed holdings and trying to time them not to suck too much.  

[lurkyloo]

How funny, proboards is now censoring the word “d*mp”    As in truck.

[lurkyloo]

I am really, really good at timing my DCA events wrong    Can someone please reassure me that in ten years I won’t care about the exact timing, please?

I’m holding more cash than strictly necessary, with around 20% assets in bonds, MM or gold (not counting RE).  Been moving about 10K a week into VTI on taxable, figured there was no point in taking an RMD until I was done with the current round of dollar cost averaging.  But, I started holding off on putting the new Roth contribution into the S&P only to see a weeklong bull run.  And yet everyone keeps predicting a dip on the horizon.    I lump summed my one HSA in at basically the height of the market and don’t want to go through that again…but man, I just don’t have the stomach for much more than set and forget.

[tallguy]

Aug 31, 2023 16:54:39 GMT -5 lurkyloo said:

I am really, really good at timing my DCA events wrong    Can someone please reassure me that in ten years I won’t care about the exact timing, please?

I’m holding more cash than strictly necessary, with around 20% assets in bonds, MM or gold (not counting RE).  Been moving about 10K a week into VTI on taxable, figured there was no point in taking an RMD until I was done with the current round of dollar cost averaging.  But, I started holding off on putting the new Roth contribution into the S&P only to see a weeklong bull run.  And yet everyone keeps predicting a dip on the horizon.    I lump summed my one HSA in at basically the height of the market and don’t want to go through that again…but man, I just don’t have the stomach for much more than set and forget.

Sorry, can't do that.  This will haunt you for years.  Looking back at that time, will you even be able to live with the fact that instead of earning 10.6% annualized returns you only earned 10.5% instead?  If you own guns, I'd strongly suggest getting rid of them now.  Why take the risk?

[Rukh O'Rorke]

Aug 31, 2023 16:54:39 GMT -5 lurkyloo said:

I am really, really good at timing my DCA events wrong    Can someone please reassure me that in ten years I won’t care about the exact timing, please?

I’m holding more cash than strictly necessary, with around 20% assets in bonds, MM or gold (not counting RE).  Been moving about 10K a week into VTI on taxable, figured there was no point in taking an RMD until I was done with the current round of dollar cost averaging.  But, I started holding off on putting the new Roth contribution into the S&P only to see a weeklong bull run.  And yet everyone keeps predicting a dip on the horizon.    I lump summed my one HSA in at basically the height of the market and don’t want to go through that again…but man, I just don’t have the stomach for much more than set and forget.

lurky, lurky, lurky.....  <shakes head>

this isn't about DCA, this is about trying to time the market.

Can't be done. Pick your AA and stick with it because the market gonna do what the market gonna do and we mere mortals are just along for the ride......

don't forget to buy your ticket on time.... 

[lurkyloo]

Aug 31, 2023 17:06:54 GMT -5 tallguy said:

Aug 31, 2023 16:54:39 GMT -5 lurkyloo said:

I am really, really good at timing my DCA events wrong    Can someone please reassure me that in ten years I won’t care about the exact timing, please?

I’m holding more cash than strictly necessary, with around 20% assets in bonds, MM or gold (not counting RE).  Been moving about 10K a week into VTI on taxable, figured there was no point in taking an RMD until I was done with the current round of dollar cost averaging.  But, I started holding off on putting the new Roth contribution into the S&P only to see a weeklong bull run.  And yet everyone keeps predicting a dip on the horizon.    I lump summed my one HSA in at basically the height of the market and don’t want to go through that again…but man, I just don’t have the stomach for much more than set and forget.

Sorry, can't do that.  This will haunt you for years.  Looking back at that time, will you even be able to live with the fact that instead of earning 10.6% annualized returns you only earned 10.5% instead?  If you own guns, I'd strongly suggest getting rid of them now.  Why take the risk?

Appreciate the moral lack of support!  I determined that by doing my weekly DCA Wed morning instead of my usual Thurs I cost myself about $60 extra    Clearly it’ll be cat food in retirement for me, and I’m a vegetarian  

[lurkyloo]

Aug 31, 2023 21:50:04 GMT -5 Rukh O'Rorke said:

Aug 31, 2023 16:54:39 GMT -5 lurkyloo said:

I am really, really good at timing my DCA events wrong    Can someone please reassure me that in ten years I won’t care about the exact timing, please?

I’m holding more cash than strictly necessary, with around 20% assets in bonds, MM or gold (not counting RE).  Been moving about 10K a week into VTI on taxable, figured there was no point in taking an RMD until I was done with the current round of dollar cost averaging.  But, I started holding off on putting the new Roth contribution into the S&P only to see a weeklong bull run.  And yet everyone keeps predicting a dip on the horizon.    I lump summed my one HSA in at basically the height of the market and don’t want to go through that again…but man, I just don’t have the stomach for much more than set and forget.

lurky, lurky, lurky.....  <shakes head>

this isn't about DCA, this is about trying to time the market.

Can't be done. Pick your AA and stick with it because the market gonna do what the market gonna do and we mere mortals are just along for the ride......

don't forget to buy your ticket on time.... 

I have a lot in common with Aly Raisman’s mom, I got no chill.  I will go ahead and set my weekly DCA for the HSA for tonight since a surprise 1 pm meeting and another running long meant I didn’t have the chance yesterday.  I just want my DCA to all go in at the bottom of the market, is that so wrong?  

Did not enjoy throwing my meager 10K HSA into the market and watching it immediately go to 6K way back when; I don’t have the stomach for lump sum rn with PE ratios so high.  So DCA it is.

[lurkyloo]

TIAA never received the LOA to gift securities    Writing up another now, including a “please only make one donation not two” note, and gonna have to put tracking on it.  I was pretty sure they were supposed to auto deposit dividends as well, long story short I delved through a giant stack of paper and eventually determined they had mailed a check instead.  Spent 30 min on the phone straightening things out.

Maybe I ought to leave the capital gains on mail-a-check mode since it’s easier to move it over to Fidelity that way 

[lurkyloo]

I am furious.  I just got a call today from TIAA who are insisting that they need a medallion signature and for the recipient to complete an application for a new account at TIAA.  So a. they received the mailed paperwork but didn’t do a thing with it for more than two weeks, to the extent of telling me to send a replacement letter and b. their form printed from their website makes no mention of a medallion signature, c. their form has a place to fill out information for the receiving brokerage, d. wtf why the hell should the recipient need a tiaa account?

I’ll see whether the recipient can initiate the transfer from their end but I can’t see myself staying at TIAA.  

[lurkyloo]

Just figured out that there are a few chunks of shares in my LFF (least favorite fund) showing a capital loss, and clicked redeem. That cuts the holding down by a little over 10%    Need to figure out the donor advised fund thing next-going to transfer 30K or so of low cost basis shares to it.  Sort of feels like progress!  

Now of course I have to reinvest the d*** funds.    Been doing about 10K every Thurs to VTI but should probably accelerate that a bit.  But, Roth invested, HSA half invested.

Next task: link accounts a little better so next time I can do a more direct transfer.  Wound up requesting a check this time…was hoping there would be an add tracking option.  Maybe I’ll call.