Inherited IRA
Hi Terry, I took my first RMD from an inherited IRA, and I don’t want to spend it. I’m 49. I don’t really know what the smartest thing is to do with it to make it grow. Would it be smarter to buy bonds, open a Roth IRA, or do something else? I’d also like to keep the tax amount as low as possible since I just had to pay about $600 in taxes on the RMD.
Terry Says
Once you’ve paid the taxes on the RMD, there are no more taxes until you invest and sell that investment at a profit. OR you could put the investment INSIDE A ROTH IRA — at Fidelity or Vanguard.
At your age, you can put up to $7,000 per year into an IRA. And next year, when you’re 50, the amount goes up to $8,000. You don’t get a deduction for your Roth contribution — but all gains will come out tax-free down the road. And you won’t have RMDs from a Roth.
So make the contribution immediately, you have less than a week to put in a 2024 contribution. Just put it in a money market mutual fund for starters, till we see what happens to the stock market!
