Seniors investing “extra” money with minimal income tax exposure
Hi Terry, My husband and I are in our mid 70s and early 80s and have been slowly converting traditional IRA money into our ROTH IRAs, avoiding IRMAA penalties. Do you have a suggestion where to invest an unexpected 100k inheritance. I would consider this “extra” money that may not be drawn for several years, and would like it to be under our living trust. We would also like to minimize any income tax implications. Please advise.
Terry Says
Anything you earn on this money will be taxable income — unless you invest it in tax-free municipal bonds (which likely have principal risk). There are tax-free money market funds at Fidelity and Vanguard, so you might check those out. But beware of tax-free bonds of longer maturities, which have more risk if rates ever rise again.
Otherwise, you can earn nearly 5% right now in 6-month Treasury Bills. Read this article for instructions, and be sure to open the account in the name of your revocable living trust.
https://www.terrysavage.com/t-bills-beat-cds-2/
