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By Terry Savage on July 30, 2019 | Chicken Money

I religiously read your Mondays column in the Chicago Tribune and both appreciate and enjoy it very much. In your most recent article you lauded treasury bills for us ‘chicken hearted’ folks. Is taking money out of an IRA a good idea to place into T’bills?

Terry Says

The one thing you can’t do is invest an IRA in Treasury bills!  That’s because an IRA requires a custodian — a place like a bank or Vanguard or Fidelity.   And the Treasury does not act as a custodian for an IRA account.

It’s always a mistake to take money out of an IRA before absolutely required.  You lose the tax-deferred growth — and pay taxes on the withdrawal from an IRA (and a 10 percent penalty if you’re under age 59-1/2).  But if you have an IRA at a place like Fidelity or Vanguard, and you want to opt for some safer investments, you can always put some of your IRA money into one of their money market mutual funds that buys only short-term Treasury bills.  Generally, I advise doing this only if you’re in retirement, and need liquidity to take required distributions.  Your IRA is meant for the long run — and over the long run (at least 20 years) you’ll do better in a diversified stock portfolio.

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