Q: I have a Rollover IRA, Roth IRA and a Simple IRA. Currently I am contributing to the Simple IRA. So when I take into account the “buckets” you refer to, do I take all of those into consideration? And out of those three accounts is there a difference in how I would invest the money?
A: You absolutely should take all of your accounts into consideration; however, different types of IRA accounts have different distribution rules. Traditional IRA distributions can be taken at any time after you attain the age of 59½, but the required minimum distribution (RMD) rules state that the distributions must (except Roth IRAs) begin by April 1 of the year following the year in which you attain the age of 70½. In other words, you are not required to make withdrawals from your Roth IRA.
As such, when considering the “bucket approach”, you might take on a little more risk or growth opportunities in your Roth IRA because you can let it accumulator longer.