Avoiding taxes on an inherited IRA
Is there any other vehicle or trust that can be set up prior to receiving the monies that will avoid the tax. A trust where the money goes to the person’s trust or???
Is there any other vehicle or trust that can be set up prior to receiving the monies that will avoid the tax. A trust where the money goes to the person’s trust or???
Permalink Submitted by Alan - IRA critic on Wed, 2013-01-30 15:58
A trust is just another entity that would receive the required distributions rather than the individual, both subject to filing returns. Trust tax rates are higher than individual rates if the trust accumulates the distributions instead of passing them through. Both a trust and individual may have other transactions that result in reduced total taxable income for the year.
Permalink Submitted by mk foss on Fri, 2013-02-01 05:20
The tax cannot be eliminated but if you stretch the payments out as long as possible, the tax bite won’t be as bad. If you were named directly as a beneficiary, the default s to take RMDs over your lifetime. Shorter stretch out periods may apply if you weren’t named directly. The worst tax situation happens if you take it all out at once.