When it comes to investment decisions, the questions are endless. This week, Bruce Kajiwara, The Bee's online expert on investing, tackles readers' questions on IRAs, TSPs and new-baby accounts.

To see more questions answered by our other local experts on taxes, financial planning and estates/wills, go to www.sacbee.com/ask

Bruce Kajiwara, CPA and investment adviser

I'm 66 and recently retired. My wife is 61 and never worked outside the home. I have modest savings in my TSP account, which I need to leave for my wife. If I die first, she will not be able to leave the money in a TSP. Therefore, I'm thinking of opening a Vanguard target fund where it would be easy for her to roll over the TSP and avoid (paying taxes). Or, maybe there's a better way?

You've said the magic words – "recently retired" – which most of us hope to say sooner rather than later!

I presume your TSP is a Thrift Savings Plan, which is a retirement savings plan for military members and civilians who are employed by the U.S. government. According to the TSP Web site, a surviving spouse may be able to transfer "all or a portion" of the account to a traditional IRA, a Roth IRA or other eligible employer retirement plan. This is the route your wife should consider to avoid paying taxes on the TSP distribution.

Vanguard has 11 target retirement funds. These are multi-fund portfolios that automatically become more conservative as you approach retirement age. While this may make these funds 'easy,' I recommend discussing any investments with a qualified financial adviser or tax professional.

Remember, if you open a Vanguard Target Retirement Fund, it needs to be an IRA (not a personal account). Don't transfer your TSP to a personal Vanguard account, or the distribution may be subject to income taxes.

As I approach 70, I need to think about a scheduled withdrawal of funds from my traditional IRA. My financial adviser suggests moving them to a Roth IRA so the earnings will be tax free. She also suggests reducing the tax liability for those withdrawals by using some of my long-term capital gains losses. Is that allowable under state or federal tax law?

You are to be commended for planning ahead for IRA withdrawals, which are mandatory at age 70 1/2.

Converting your traditional IRA to a Roth IRA can be beneficial in two key ways: Distributions from your Roth IRA are not subject to income taxes, and you are not required to take distributions at a certain age.

However, Roth IRA distributions taken within five years of the first year of a conversion may be subject to tax penalties. Also, the advantage of conversion increases if you have more time to grow your IRA. Since you are nearing age 70 1/2, the time between conversion and withdrawal is much shorter, minimizing this advantage.

Your second question addresses using long-term capital losses to offset income. While this is a viable strategy to reduce your overall tax liability, the benefit may not be as large as you anticipate. Your allowable capital loss deduction is maxed out at $3,000 ($1,500 if you are married, filing separately).

I strongly recommend discussing these strategies with your tax adviser.

Our 28-year-old daughter lives in Australia. She and her Australian husband are expecting a baby in October. We would like to open an investment fund for our grandchild but need to know the ramifications of a U.S. account for a child with dual citizenship. Can you point us to some information?

I hope your daughter realizes how lucky she is to have parents wanting to invest on behalf of her child. A gift that keeps on giving!

I contacted two separate financial institutions: one that offers custodial investment accounts for a minor, and the other a provider of 529 college saving plans. Both would have no problem opening an investment account, as long as your grandchild has a Social Security number. Contact your CPA and attorney for additional guidance.