I am POA for momma's finances. Dad bought her a long term care policy that pays up to $250.00 a day. Her balance on that policy is almost $400000.00. She is 86 and lives in assisted living. She also receives dad's pension, gets ss and a mortgage payment every month. Momma has to take a required ira distribution next year in the amount of $30000.00. She has $178000.00 in savings and $30000.00 in the trust checking account. IRAs over $400000.00. I just pre paid for her funeral. My question is what do I do with her ira distribution? Just stick it in savings or is there a better decision?
(half joking)
I suggest that you sit down with a good Financial Advisor and figure a plan that would work the best for her and make it easy on you when she passes.
Next year's RMD can be invested in a low cost index fund.
If you are keeping money is savings, make sure that you don't exceed the 250k FDIC insured limit in any one bank.
Is the FA a fiduciary? Is s/he fee for service or charging a percentage of mom's assets each year?
Posing this question at www.bogleheads.org will get you amazingly expert advice.
There are some considerations to take into account if you do make the w/d. Your mom is 86 and has done well, does she want additional growth or would she want the safety of just maintaining what she has? Under the new administration we don't know what the economic climate will be. Did SHE make the decision to place almost a half a million dollars in both checking and savings? She's getting absolutely no interest in either one of those or in CDs if she's in those. If so, that tells me that she is very conservative. Consider that when and if you make the w/d and talk to an advisor. If she's OK with investing the amt in the market to try and make some money, then you pretty much have to open a new taxable acct for her. Because the $30K is a small amt of her estate, she might want to do that. The checking and savings accts won't grow and you can't put it in the IRA because the money will have been taxed so a new acct might be worth while. These are not recommendations but considerations you should bring up with your FA.
I don't understand the mortgage pay't she's getting. Is that from a reverse mortgage? If so, why? A reverse mortgage is a debt that has to be paid back. If she still owns a home why not sell it, pay off the debt and put the money into one of the accts also. And the LTC policy was an excellent decision. That'll preserve much of her assets if she ever has to go into MC.
Yes dad already bought the burial plot and headstone. I just now purchased the foot stone for her. It is not that I am trying to hurry her to the grave - she had the money and I wanted it to look just like dad's and my brother who is also buried there.
The $30000.00 is in a trust for her. I was thinking about using what I need for the attorney, processing fees, income taxes and executor fees when the time comes.
The one thing about IRAs, though, is that with the SECURE Act, you (when you inherit her IRAs) will have only ten years to take out all the money from them. That could mess up your taxes.
I use Charles Schwab as my advisors for my mother's finances. I suggest you get a financial advisor to help you handle her money. It's well worth it, because you should preserve her capital while growing it as well, and a savings account won't grow.