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Re: Windfall Advice

Posted: Wed Jun 14, 2017 9:03 pm
by Xan
sophie wrote:buy the lowest interest-rate option you can find, e.g. pick a 2.5% bond over a 3.25%.
Just to clarify: you're talking about the coupon, right?

Re: Windfall Advice

Posted: Fri Jun 16, 2017 11:09 am
by mukramesh
Ah thank you, I realized that maturity affects duration but I forgot the yield.
Is it true that we always want the highest duration bond (i.e. lowest yield for the longest maturity)? And is this also true in retirement accounts?

Re: Windfall Advice

Posted: Fri Jun 16, 2017 2:00 pm
by Mark Leavy
mukramesh wrote:Ah thank you, I realized that maturity affects duration but I forgot the yield.
Is it true that we always want the highest duration bond (i.e. lowest yield for the longest maturity)? And is this also true in retirement accounts?
It's much simpler than that. You just want the lowest coupon rate for the maturity you are interested in.

Sophie had a really good exposition on it - but it boils down to market efficiency and taxes. The yield works out the same for a given maturity - regardless of which bond you buy. So buy the one where your gains will be taxed as long term capital expenses instead of as short term interest income.

Re: Windfall Advice

Posted: Sat Jun 17, 2017 2:14 pm
by MWKXJ
stuper1 wrote:This is a very important question. If the money is coming from a tax-deferred retirement account, you may be able to roll some or all of it into a new tax-deferred account and let it continue to grow without paying taxes.
Took a while for the details to come in, but much of the money *is* in tax deferred accounts. A portion is in physical bullion (we're researching a safe now). Some is in the form of a refund from an annuity (why an annuity is being refunded is something I don't yet fully understand).

Having never inherited before, we're assuming this tax deferred money can be rolled over. We'll be consulting an expert.

Re: Windfall Advice

Posted: Sat Jun 17, 2017 5:00 pm
by ochotona
Only spouses can roll their deceased spouses Traditional IRAs over and keep going. Other heirs are given a time schedule during which you have to take distributions and pay taxes. But Roth IRAs you don't have to take a distribution on.

Best to get help from a CPA or Enrolled Agent.