Each of my two sons will inherit a conduit IRA from their grandmother. The IRA is now worth about $45,000 and consists primarily of a government bond fund (about $40,000) and one stock (Texaco). As I understand how this works, each will be required to take a minimum annual distribution over a five year period. Given the 5 year timeframe for this account, I'd appreciate any advice whether it's worth reinvesting in some sort of MI screen, leave as is, or whatever. Would it be better to withdraw the entire account in one lump sum and open a regular investment account for them?I do not know the amount of taxable income they have but if it is minimal, then take out as much money for the IRA as you can without getting out of the 15% tax bracket or if they have income then the 28% breaket.The benefit to getting out early is that the earnings on the money will not be taxed. The negative is that you will have less money to invest because you paid tax on it.If the money will be invested for the longterm I would invest the IRA for the longterm. When you sell the investment in the IRA rebuy in a regular account. I would not think in terms of a three to five year investment in the IRA and get into fixed income.
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