Municipal Bond Forum
Rolling over bond fund money to an account with individual bonds
Q
I will be retiring within two years and will have a defined benefit plan retirement of approximately $5,000 per month. In addition, I have another tax-deferred benefit plan, 100% of which is invested in a bond fund, which has been good to me over the last two years, although it has declined in value recently. When I retire, I would like to roll the bond fund over to another tax-deferred account. The balance in the bond fund is approximately $650,000. I also have real estate valued at approximately $800,000 (no mortgages) and cash reserves of $130,000 in CDs. I have been reading the Bond Forum and know how you feel about bond funds. Can I roll over the money in the bond fund to a tax-deferred account owning individual bonds? My lifestyle is such that I don’t need additional income to live on.
A
James A. Klotz responds:
As you suggest in your email, your tax-deferred account can be “rolled over” into an individual retirement account (IRA).
An account value of $650,000 is more than adequate to provide ample diversification as well as income to fund distribution requirements down the road.
In your IRA, you can own the same individual securities as your mutual fund but forego the additional costs and fees.
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