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 Dear Tax Talk:
Can I roll over money from my traditional IRA
to a money market account without tax consequences?
I don't plan on touching the money. I just want
to move it to a location less vulnerable than
the stock market, like a money market fund, because
this will be more stable. I will turn 58 this
year. Thank you in advance for your help.
-- Larry
 Dear
Larry,
It is understandable that you would want to change
your investment strategy. As we age, our investment
time-frame changes, decreasing our tolerance for
risk.
When you're in your 30s, your investment time frame for retirement
savings is probably well over 20 years. This will
allow you to recover from most downturns in the
stock market. At 58 years of age, you may be thinking
of early retirement and want to be assured your
capital will remain intact. Hence, you'll move
away from investments that put your capital at
risk, such as equities, and move to safer investments,
such as money markets.
This rebalancing of your portfolio
doesn't mean you have to take your funds out of
an IRA. This is especially true when you're under
age 59½, when most retirement fund withdrawals
will result in a 10 percent penalty.
An IRA is an investment account designation. An IRA-designated account can be invested in most traditional investments, such as money markets, certificates of deposit and stocks. One IRA can be invested in more than one type of investment product. For example, you can have an IRA that is 50 percent CDs and 50 percent stocks.
When you rebalance, you may want to consider leaving some of the account that you may not need in the near future in an investment product that can yield better returns than a money market fund.
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