non spousal inherited IRA
I inherited a $56,000 IRA. I am 54 years old. What is the best course of action to avoid paying taxes and what are my options? Thanks….
I inherited a $56,000 IRA. I am 54 years old. What is the best course of action to avoid paying taxes and what are my options? Thanks….
Permalink Submitted by Alan Spross on Sat, 2008-04-19 18:17
Unless it is a Roth IRA, your distributions are subject to tax, and you must take RMDs beginning in the year following the owner’s death. If you limit your distributions to just the RMD amount based on your life expectancy, you will defer the taxes to later years but still owe taxes on the amount you take out each year.
Check to see if the owner had any basis in the account from having made non deductible IRA contributions. Check the prior tax returns for a Form 8606 reporting such contributions for the year made or distributions taken in recent years. If there is no sign of the form, your distributions will be fully taxable.
Permalink Submitted by Al Fry on Sun, 2008-04-20 01:09
And, because it is an inherited IRA, the 10% penalty on distibutions will NOT apply.