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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?

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I'm taking money from my mom's traditional IRA and putting it into a tax-free Roth IRA.

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.
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MJ1929 Nov 8, 2020
*Also, there's no RMD for 2020, so it's a smart idea to take as much out of the traditional IRA as you can without bumping her into a higher tax bracket and moving it to a Roth (if that's what you want to do).
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@akababy7, much wiser to preplan and prepay funeral so that you are not swayed by emotion if you wait until the last minute. This way you can plan and have exactly what you want with little pressure and not have to worry about costs that may increase.
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Your mom is in excellent financial shape. As you know, as her POA you have a fiduciary responsibilty to do what's best for her. I would follow the advice of the previous posters and meet with a finacial advisor who also is a fiducairy. He/she should either be a CFA or a CFP. As already stated, RMD from accts might be suspended for 2021 also as they were this year. In that case I would leave the money alone. Congratulations on pre-paying her funeral. That'll save you the aggrevation of trying to do that under stressful conditions. Does she have a burial plot and headstone? You might consider that also.

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.
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akababy7 Nov 8, 2020
Thank you for the info. The mortgage payment she receives is on a condo that her and dad lived in - they sold it and the new owner pays the mortgage payment to momma/the trust every month - not to a bank. Momma's past house that she lived in with dad was sold when momma had to go into assisted living. She had equity on that house - $148000.00. I put it in her savings. Didn't know what to do with it. Talked to our financial advisor about that and he really didn't say that much about it.

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.
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Aka, you can make sure that mom's money is working for her.

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.
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I know that with this kind of assets you have a good CPA. No one needs to make a required IRA withdrawal this year; with covid rampant who knows what will happen next year, and you don't have to do this for the entire year of 2021 until end of year in any case. So when you work with the CPA this year on Mom's taxes, check with him or her on this question; they or the fiduciary who handles all the finances will be your best advisor on this.
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She can adopt me.
(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.
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akababy7 Nov 8, 2020
Thank you. We have a financial advisor and I was kind of thinking about this already. That is why I pre paid her funeral. I know that I am going to be upset and with no help from siblings I went ahead and made payment. She had the money anyway.
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