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While payouts from your bond fund may be called "dividends, " they're really interest and don't qualify for the 15% rate.
FORBES: How to adjust your investing, loan and AMT strategies.
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For those who do, it usually makes sense to convert unless your conversion tax rate is much higher than your rate on future payouts, which is rarely the case.
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Moshe Milevsky, an associate professor of finance at the Schulich School of Business at York University in Toronto, recommends investing mainly in stocks to maximize the odds that your account value and payouts will rise.
WSJ: Cheaper Annuities With Living Some Benefits
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Whatever your age, you must take annual payouts from a pre-tax IRA inherited from a parent or someone other than a spouse.
FORBES: Take Money Out Of Your IRA In 2010, Or Else
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After you deal with payouts, review the beneficiary form your IRA sponsor has on file and consider changing it.
FORBES: IRA Tips and Traps
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With a traditional IRA you have to take mandatory payouts starting at age 70.5, while you can keep the money in a Roth as long as you like, even leaving it to your heirs who get income-tax-free payouts.
FORBES: Magazine Article
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That can be most severe if your broker doesn't offer free reinvestment of the monthly dividend payouts, as done by open-end funds.
FORBES: Magazine Article
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It helps your case if the trust document gives the trustee broad discretion to make payouts or has specific language addressing distributions to reduce or avoid taxes.
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Annualized, those payouts come to 11.6% and 12.8% of your starting principal.
FORBES: A 10% Annual Payout For Retirees