Looking for an IRA savings account

[Captain Save]

Looking for an IRA savings account for a retiree .. preferably an online one with decent yields..

what do you guys use?

[MooseBucks]

Looking for an IRA savings account for a retiree .. preferably an online one with decent yields..

what do you guys use?

Capital One 360 is 1% for savings and 2% for CD. Haven't used them for IRAs but have for checking/savings/cds with no complaints.

[disneysteve]

I think Ally has one of the best rates. Capital One isn’t great on their savings but their money market is 1.5% for balances of 10K or more.

[Thrif-t]

Yep I use Capital One but I'm rethinking that after something i read on a FB post which said you can't set beneficiaries up on them.

I never thought that I didn't do that since I have them on my regular Capital One account and figured it'd transfer over. The Capital One guys just responded to the post and said if you had the proper paperwork you could get the funds after the estate clears. I need to look into more myself.

[Gailete]

I use Capital One 360 and have a Roth IRA as well as an IRA elsewhere in a mutual fund. I don't use a savings account for an IRA. Are you or this person locked into the idea that it has to be in a savings account? Is there a reason why? Is this an account to put his IRA withdrawals into from an IRA with better yields? Or does he just want a higher interest savings account to tap as needed. If so I would suggest a Roth IRA that can be earning higher rates and as long as he only withdraws the principal that he puts in and leaves the interest alone.

I guess it all depends on his/her needs.

[Captain Save]

I use Capital One 360 and have a Roth IRA as well as an IRA elsewhere in a mutual fund. I don't use a savings account for an IRA. Are you or this person locked into the idea that it has to be in a savings account? Is there a reason why? Is this an account to put his IRA withdrawals into from an IRA with better yields? Or does he just want a higher interest savings account to tap as needed. If so I would suggest a Roth IRA that can be earning higher rates and as long as he only withdraws the principal that he puts in and leaves the interest alone.

I guess it all depends on his/her needs.

This is for a retiree ... they have income coming in from a pension but they also want savings if they need to access the money beyond their budget.

As far as better yields, are you asking about a savings with better yields .. or are you thinking about putting it in the equities?

[Captain Save]

I think Ally has one of the best rates. Capital One isn’t great on their savings but their money market is 1.5% for balances of 10K or more.

Ended up going with Ally .. 1.45 % now .. even if it's under 10k.

but during my brief research .. those 2 seem to be the ones worth looking at.

[Gailete]

If the person is already retired and I'm making an assumption here that they are over 65, why the IRA? IRAs are good accounts for saving for retirement and also as a tax dodge of sorts. Your friend will have to pay taxes I believe if he pulls money out. Why not just a regular savings account or a CD if he wants to remain very liquid, next best is a Roth IRA as they can withdraw money tax free as long as he doesn't take any of the increase out of the account.

Obviously not my business, but opening an IRA to hold excess retirement money when the person is already retired, seems a bit odd. Of course if he is rolling over money from his retirement account at work to the IRA may be a different story. One of the reasons why sometimes more facts are important to give the best advice.

[disneysteve]

This is for a retiree ... they have income coming in from a pension but they also want savings if they need to access the money beyond their budget.

I'm confused. If they are already retired, what income are they using to fund their IRA? You need to have earned income. I don't think their pension payments would qualify.

[Captain Save]

I'm confused. If they are already retired, what income are they using to fund their IRA? You need to have earned income. I don't think their pension payments would qualify.

She just retired as of Thursday.. She has a lump sum amount that she would annuitize as part of the pension... but she wanted some savings as well so she annuitize a large chunk of it but rolled over the savings into an IRA savings account.

Edit: I see what you're saying about earned income.. I'll check but she went to a couple of credit unions and they told her she could roll over to the IRA .. So I'll see what they say. She should get another job but she doesn't want to

[disneysteve]

She just retired as of Thursday.. She has a lump sum amount that she would annuitize as part of the pension... but she wanted some savings as well so she annuitize a large chunk of it but rolled over the savings into an IRA savings account.

Edit: I see what you're saying about earned income.. I'll check but she went to a couple of credit unions and they told her she could roll over to the IRA .. So I'll see what they say. She should get another job but she doesn't want to

A rollover is fine. That doesn't need to be earned income.

I just wonder what purpose the IRA savings account would serve. I think most retirees probably take their annual IRA required distribution and that's part of what they live on for the year along with SS and other income sources. I think of a savings account as a more day to day sort of account where you might tap the ATM for $20 to go to a movie or take out a few hundred for a trip, but that isn't how you would use an IRA since there are specific rules and tax implications to your withdrawals.

[Gailete]

I'm confused. If they are already retired, what income are they using to fund their IRA? You need to have earned income. I don't think their pension payments would qualify.

Precisely why I was confused. Even though kind of retired I still contribute to my Roth IRA as I do have a smidgeon of earned income. Most people, I thought anyhow, pull their retirement money out and into regular savings vehicles, especially if they hit 70 without having needed it. I didn't think that they would start up a new IRA of any sort with their retirement money.

[Captain Save]

A rollover is fine. That doesn't need to be earned income.

I just wonder what purpose the IRA savings account would serve. I think most retirees probably take their annual IRA required distribution and that's part of what they live on for the year along with SS and other income sources. I think of a savings account as a more day to day sort of account where you might tap the ATM for $20 to go to a movie or take out a few hundred for a trip, but that isn't how you would use an IRA since there are specific rules and tax implications to your withdrawals.

She did not want to get taxed on taking the lump sum .. she would only get taxed if she needs to withdraw which would be for large emergencies. Her withdrawals are limited to 6 per month. The annuity is what she would live on and she has budgeted for it with some room left over for unpredictable expenses.

So with that said.. would you do it differently ?

[Petunia 100]

She did not want to get taxed on taking the lump sum .. she would only get taxed if she needs to withdraw which would be for large emergencies. Her withdrawals are limited to 6 per month. The annuity is what she would live on and she has budgeted for it with some room left over for unpredictable expenses.

So with that said.. would you do it differently ?

I personally would, yes. I would invest the money conservatively so that inflation did not erode my principal. At 65, she may be around another 30 years.

But she is the person who must be comfortable with the decision.

[disneysteve]

She did not want to get taxed on taking the lump sum .. she would only get taxed if she needs to withdraw which would be for large emergencies. Her withdrawals are limited to 6 per month. The annuity is what she would live on and she has budgeted for it with some room left over for unpredictable expenses.

So with that said.. would you do it differently ?

Hard to say but I think I would do it differently. I wouldn't have my emergency fund be in my IRA. In a Roth, maybe, because money can be withdrawn from that at any time without tax consequences, but not in a traditional or rollover IRA.

I'm no expert on drawing down one's nest egg in retirement so I'm not really the best one to answer this question. It just doesn't sound to me like the best way to go here.