Tax Planning for the 10 Year Rule on Inherited IRAs
Does anyone have a suggestion for software to assist in analyzing how best to plan distributions under the 10 year rule for inherited IRAs?
There are lots of issues to consider
Tax rates,
Medicare IRMAA
Social Security Tax
other issues
Permalink Submitted by Alan - IRA critic on Wed, 2024-02-21 19:24
Do not know of any, but the effect of an inherited IRA distribution is the same as any other income. Generally, distributions each year should be geared to keep the marginal tax rate the same, therefore more would be distributed in lower income years, and less in higher income years. Most people already are taxed on the full 85% of SS income, IRMAA thresholds might be projected to increase about 2% a year from here, and the sunset of current income tax rates next year could be ignored for those below 22%, but might be increased by 3% for those at 22 and higher. Roughly equal distributions each year (1/10 of balance, then 1/9, then 1/8 etc) will usually exceed the RMD in years 1-9 if there is one, but each year the RMD would be the minimum allowed.