My mother inherited a traditional IRA (non-spousal) and we have began to take withdrawals to clear the account in the 10 year time frame. The IRA contains 4 mutual funds and 4 investment mixes of stocks and bonds.
One of the bonds over the course of the past year has been declining. It’s on an upward trend again.
I got some advice from a CPA on how to liquidate this IRA via individual withdrawals from each of the investments within the IRA to total our yearly target of total withdrawals.
A family member got involved and is now telling her to completely wipe out that bond since it’s losing money. My gut is telling me that this will put the fund out of balance and cause more problems, but I can’t find any literature about this specific issue; and frankly, I’m learning on the fly myself.
Everything I’m seeing talks about rebalancing, but because this is an inherited IRA, we cannot rebalance within the existing account .
I’m trying to come up with a good way to explain that wiping a single fund might cause more harm than good; presuming I’m correct about potentially causing a diversification issue. Simply telling her ‘listen to the accountant’ isn’t going to cut it.
Thanks!
original posted by CerebralAssazin to r/personalfinance on Wed, 06 Mar 2024 19:19:37 GMT.