Moving IRA from stock to bond funds?

You don't have to do it in on single move. Can't you move, let's say,

What tax problem are you talking about? At your age you have Required Minimum Distributions each year, and withdrawls from either stock or bond IRAs are treated identically as ordinary income.

I really don't understand the above statement. Whether your IRA, or multiple IRA's is/are invested in stocks, bonds or anything else has no effect on tax at all. You can sell stock held in an IRA at will and invest the money in bonds and it will have no effect on your tax.

Again, I don't understand your "tax problem". Turning stock into cash and using that cash to buy bonds within an IRA is not a taxable event. IRA's don't pay capital gains tax.

I assume you are talking about traditional IRA's and not ROTH IRA's.

You said that you are 70 1/2 which means that you will be required to start taking required minimum distributions (RMD) from your traditional IRA(s) and you WILL have to pay the tax on that -- but you have to do that at your age anyway, no matter how many IRA's you have or what your investments are.

The RMD is determined by the total amount of ALL of you traditional IRA's no matter how many you have. It also doesn't matter how much or which IRA's you withdraw the required amount from as long as the total of all withdrawals equal the total RMD amount.

If you are living from cash from non-IRA accounts, balancing your IRA investments should have not effect at all on your lifestyle or the amount that you will be required to withdrew from your traditional IRA's or the amount of tax you will have to pay.

I am 65 and I wouldn't want more than 1/3 of my IRA's invested in stock. Right now, short term (2-5 year) insured CD's are paying about as much as riskier bonds. You might want to look at those until bond investment looks better.

See IRS Pub. 590 for more information on IRA's.

Leave it in stocks. There is no basis for a rule that says "because you are old, you have to own bonds." You have cash to live on.

The reason for bonds is to avoid the risk of selling stcks when the stock market is down. You are smart enough to deal with that.

Frank

I would guess that you are not in the 65-70 year old range, Frank. Buy low and sell high and invest in stocks for the long run is fine for a younger person.

But you are ignoring, (again assuming that the OP was asking about traditional IRA's), that the OP, at his age, is required to start taking rather large distributions (RMD's) which will force him to sell off investments at whatever the price the market happens to be at the time. Because most of his investments are in stock he will not be able to deal with a "down market" by not selling at that time as you suggest. He will be forced to sell off the stock to get enough cash for the RMD and to pay the tax.

You are correct that bonds are not as volatile as stocks which is exactly why it is better, in my opinion, to be invested in fixed income (less volatile) securities at his age when he is forced to sell regardless of the market conditions at the time.

While the OP may have to sell stocks in a downturn to meet an RMD, he doesn't have to spend the proceeds of the sale or leave them in cash. If he wants, he can reinvest in the same stocks he sold, outside his IRA. So selling low isn't necessarily a disaster, because it also gives a buy low opportunity.

Dave

Ernie,

I am 66.

The OP has several years of cash now.

He is questioning the concept that old people need more bonds. I agree with him.

As Dave points out, withdrawals for RMD can accomodate market flucuations by a "sell-buy" strategy.

The OPs Cash position is a buffer for withdrawals for consumption.

Frank