diversification of portfolio
With 3 accounts in my portfolio, which must all be kept separate (inherited IRA, Roth IRA, traditional IRA) my fiduciary would like to see more diversification. He wants each account to be reinvested in funds with great diversity. Is it also ok to have one account in an S&P indexed fund, one account with a high ratio of bond, and one account with more small cap & international funds? Does this method satisfy the diversification goal? Thank you!!
Terry Says
First, do you really have a FIDUCIARY –and was this his/her suggestion??
(Just asking, since this seems strange. Did your advisor put the word “fiduciary” in writing?
Yes, the accounts must be kept separate.
But each has different withdrawal rules. You must take the money out of the inherited IRA over 10 years (assuming it was recently inherited) If it was a spousal IRA, there is more flexibility in timing.
Your own traditional IRA must be withdrawn starting at age 73 (if you are not already there) on a schedule over your projected lifetime.
The Roth has no withdrawal rules.
And you’ll pay ordinary income taxes on withdrawals from your inherited and traditional IRAs — but no taxes on withdrawals from your Roth.
So your investments inside each account should reflect the need for liquidity for withdrawals. And the timing. YOu don’t want to be forced to sell in a down market.
Did your “advisor” discuss those issues with you in considering your investments inside each??
If not, he/she is just churning your account for commissions. STOP. And read this!
