Question

Rolling over 457 / 401(k) to IRA CD at age 71?

Forum|Forum|3 years ago
November 30, 2022
1 reply
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My wife (age 71) is considering rolling over both her 401(k) and 457 into traditional IRA CDs by the end of 2022. She will be 72 in June 2023. We're aware that she'll be required to take RMDs after she turns 72. Is it 1) allowed, and 2) if allowed, is there a benefit to doing so?

Critter-3

Is it 1) allowed YES ... a roll over to an IRA is allowed

2) if allowed, is there a benefit to doing so? In the IRA you can choose different investment options which may or may not be better than what you already have. Rolling both into one IRA account will simplify your life by having just one IRA but do you want all your eggs in one basket ?

fanfare

Employee

Since she will be 72 an RMD in 2023 is required but the first RMD gets a grace period to the next April 1 2024,

so she can buy one-year CDs that mature by that time.

BUT I suggest it's better to take a 2023 RMD in 2023 so quarterly CDs would be in order.

After that she needs to raise cash in 2024 for the 2024 RMD ..

@wjgrayson

Note: the CDs that have to mature are the ones that add up to the RMD amount, not the entire IRA value.

That doesn't simplify your accounting life, it makes it more complex.

N

NCPERSON1

@wjgrayson - rolling everything to one IRA will simplify your life. Not sure what additional risk you are taking on by rolling it together, unless it is 'counter party' risk.

@Critter-3 - what risk are you suggesting?

Counter-Party risk is the only risk I can think that increases by merging two IRA's at one custodian. But if that custodian is a federally insured US bank or a brokerage house that is SIPC insured, I can't see that risk is worth worrying about.

Now, if the IRA's custodial trustee is Big Benjamin's 3 Ball Pawn Trustee, then I can see the potential hazards and risk!