inherited money and 5yr deferral
Client inherited Non-IRA money from two annuities with a very high cash value and low cost basis.
Ran proposals with the i4life Lincoln, but not beneficial, since he has to take money as income starting right away. Since low cost basis he is only getting a very low break on the taxed and principle coming out
Client is a doctor, 65yrs old and looking to retire at 70 but does want any extra income.
If we have both annuities go with the 5yr deferral:
a. is there an amount that is mandatory that he has to take out each year up to the 5th year of death due to being inherited and a annuity?
or…
b. Can he leave the money in the 5yr deferral contract until he retires and then take all the money out and pay taxes on the gain in that year?
Thank you
Douglas
Permalink Submitted by Alan - IRA critic on Fri, 2018-02-23 21:35
With the 5 year rule, he should be able to take distributions at any time and amount he chooses as long as the account is drained by 5 years from the DOD. Therefore, he should be able to wait until he retires. On the other hand, if he retires at 70, he will have to start SS benefits by then and RMDs shortly thereafter. Maybe it makes sense to retire at 69, but he should consider the options for all these income sources and try to avoid peak income years.