72T/CD’s
I currently have a 72T that I moved to Vanguard and took the 1st distribution in January there is approx 526K in the IRA I was thinking of buying a CDs within the IRA I would like to know the best way to do that. I know I have to recalculate every year for the 72T distribution so should I buy CDs and ladder them I am 53 ½. I know it can get complicated but with rates where they are I think I would feel better buying a Cds. I have another IRA as well but this is not involved in the 72T program.
Permalink Submitted by Alan - IRA critic on Sun, 2018-06-17 15:41
This is workable, you just need to carefully schedule the maturity dates so that you can fund your 72t distribution. Doing that must factor in the frequency of distributions you want over the year, although for 72t purposes you are not required to adhere to any schedule as long the 1099R for the year reports the correct amount equal to your 72t calculation. Obviously, you want to avoid having to sell a CD on the secondary market since with interest rates rising you would take a beating. Laddering will work fine as long as you structure it correctly with respect to the maturity dates. Note that VG prime MM fund is also yielding around 1.9% as of a few days ago and you could incorporate a modest position there as well, perhaps 5% or so that would fund your annual distribution.