Hello everyone and thank you for clicking on my post. I am a long time reader, first time poster. I am looking for some guidance regarding an inheritance I recently received from my father totaling approximately 6M, of which 4.75M was in a tIRA, 0.75M was in a taxable brokerage account, and 0.5M was in probatable assets (house, car, bank accounts, collectibles). My wife and I have already read the 'Managing a windfall' wiki and have increased our umbrella coverage to 5M, met with an estate attorney to update our wills and establish a trust, and met with a CPA. And of course we have told no one. Since I was the listed beneficiary on the investment accounts, those funds have now been transferred to me and are awaiting reallocation (my father was invested in individual stocks). I am seeking some feedback/suggestions on my plans for deploying these funds (included below). Additionally, I do know that my father did not take his RMD for 2024 so I will need to take that on his behalf before the end of the year. Fidelity has calculated that amount to be $265k. And I do know that the inherited IRA will need to be liquidated over the next ten years. Also, I have verified the stocks in the brokerage account did receive a step-up.
Emergency Fund: Yes, not included below.
Debt: Mortgage 1.1M at 3.25%, Student Loans $105k at 1.625% (potentially eligible for PSLF)
Filing Status: MFJ, 4 kids
Tax Rate: 35% Federal, 9.3% State
State of Residence: CA
Age: Him 47, Her 46
Desired Allocation: 80% stocks, 20% fixed income
Desired International Allocation: 25% of stocks
Approximate Portfolio Size: 6M
I have used bonesly's wonderful asset allocation spreadsheet to record our portfolio as it currently stands, and my proposal for diversifying it in boglehead fashion. Please see below.
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Notes: In my proposed portfolio, I have rolled over my wife's 403(b) from an old employer into her rollover IRA. I have also left her 457(b) invested in an S&P index even though it's tax-deferred space, since the expense ratio is 0.01 while the only bond fund available has an expense ratio of 0.42.
Annual Contributions: Her 457(b) $23k, Her SEP-IRA $30k, His Backdoor Roth $7k
529 Plans: Child#1 college senior $54K, Child#2 college junior $47K, Child#3 11th grade $57K, Child#4 8th grade $34K
Questions:
1. Any suggestions for the proposed portfolio? Does it look reasonable from a risk and tax-efficiency perspective?
2. Should I sell off the AAPL as a lump sum (limit order) or in increments? I'm not accustomed to such a large position.
3. Same goes for buying mutual funds. Buy a 7 figure lump sum or in increments?
4. Should I turn off dividend reinvestment in both the inherited IRA and brokerage in order to make taking RMDs and rebalancing easier?
5. Does it make sense to pay down the mortgage to 1M or $750k, or not given the low interest rate?
6. How much should I fund the 529s for my younger children?
7. Am I still able to do a backdoor Roth even with an inherited IRA? My understanding is inherited IRAs are not subject to pro-rata.
8. Is there anything I'm missing? Anything I should reconsider?
If you made it this far, thank you kindly! I'm always amazed by the wisdom and generosity of bogleheads!
Emergency Fund: Yes, not included below.
Debt: Mortgage 1.1M at 3.25%, Student Loans $105k at 1.625% (potentially eligible for PSLF)
Filing Status: MFJ, 4 kids
Tax Rate: 35% Federal, 9.3% State
State of Residence: CA
Age: Him 47, Her 46
Desired Allocation: 80% stocks, 20% fixed income
Desired International Allocation: 25% of stocks
Approximate Portfolio Size: 6M
I have used bonesly's wonderful asset allocation spreadsheet to record our portfolio as it currently stands, and my proposal for diversifying it in boglehead fashion. Please see below.
Notes: In my proposed portfolio, I have rolled over my wife's 403(b) from an old employer into her rollover IRA. I have also left her 457(b) invested in an S&P index even though it's tax-deferred space, since the expense ratio is 0.01 while the only bond fund available has an expense ratio of 0.42.
Annual Contributions: Her 457(b) $23k, Her SEP-IRA $30k, His Backdoor Roth $7k
529 Plans: Child#1 college senior $54K, Child#2 college junior $47K, Child#3 11th grade $57K, Child#4 8th grade $34K
Questions:
1. Any suggestions for the proposed portfolio? Does it look reasonable from a risk and tax-efficiency perspective?
2. Should I sell off the AAPL as a lump sum (limit order) or in increments? I'm not accustomed to such a large position.
3. Same goes for buying mutual funds. Buy a 7 figure lump sum or in increments?
4. Should I turn off dividend reinvestment in both the inherited IRA and brokerage in order to make taking RMDs and rebalancing easier?
5. Does it make sense to pay down the mortgage to 1M or $750k, or not given the low interest rate?
6. How much should I fund the 529s for my younger children?
7. Am I still able to do a backdoor Roth even with an inherited IRA? My understanding is inherited IRAs are not subject to pro-rata.
8. Is there anything I'm missing? Anything I should reconsider?
If you made it this far, thank you kindly! I'm always amazed by the wisdom and generosity of bogleheads!
Statistics: Posted by fishtwofry — Tue May 28, 2024 2:18 pm — Replies 0 — Views 137