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Inherited IRA

Happy Panther

By Happy Panther,
in Huddle Lounge

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Happy Panther Grand Master

Happy Panther

Posted
Posted

I inherited an IRA. Based on my readings I may have to take yearly distributions over my expected lifetime.

My question is who can tell me exactly what i need to do? As well as what fees, penalties, tax consequences there are. For example i would be taxed on the distribution, however there have been capital losses within the IRA

Tax accountant? CFA? broker?

Thanks!

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g5jamz Newbie

g5jamz

Posted
Posted

Depends on the type of IRA...and are you retired?

Roth IRA...you can take out post retirement and not be taxed...beforehand you're paying bookoo taxes (short term capital gains maybe? not sure).

Regular IRA...you get distributions post retirement but that is taxed.

Either situation if you take money out prior to retirement age...you're going to get hammered.

But I'm no financial person.

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pstall Newbie

pstall

Posted
Posted

Ahh. My old stomping grounds. The company that holds this IRA "should" be able to give you some options.

Maybe a 72T.

I'm a bit rusty as I haven't deal solely with IRA's for about 5 yrs. If you want I can hit up some old contacts at my old brokerage firm and see what they say.

But really, the bank or wherever it's at should give you some ideas.

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pstall Newbie

pstall

Posted
Posted

Its in vanguard. So somebody there should be able to help?

Thanks Pstall

Yeah, Vanguard is a sharp company. If they can't then say I would like to transfer my IRA elsewhere.

This should be easy for them to explain.

I use to know this stuff cold, but I'm in a total dif financial planet now.

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Epistaxis Newbie

Epistaxis

Posted
Posted

That seems odd, and perhaps the rules have changed, but when my Dad passed, my brother and I inherited his IRA 50/50.

My brother, being the grasshopper he is, cashed it out and spent it on himself and his blonde ho-bag du jour.

I still have my half, and it is listed as a rollover IRA. I can't add anything to it, but I can shift funds around in it.

Dunno if that helps.

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pstall Newbie

pstall

Posted
Posted

That seems odd, and perhaps the rules have changed, but when my Dad passed, my brother and I inherited his IRA 50/50.

My brother, being the grasshopper he is, cashed it out and spent it on himself and his blonde ho-bag du jour.

I still have my half, and it is listed as a rollover IRA. I can't add anything to it, but I can shift funds around in it.

Dunno if that helps.

Correct on not adding part. That would mean co mingle. The rules seem to change yearly. IRA's, no matter the type, ALWAYS allow you to move around WITHIN the IRA.

Some firms that are small and don't know anything would make people take a distb when that's not always the case.

I think Happy is looking to take funds out, but wants to do it in a tax minimal fashion. If I'm reading that right.

Or he may think he MUST take out funds.

Calling Vanguard will take care of his questions and then he can send me proceeds on the sly. :D

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Happy Panther Grand Master

Happy Panther

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Ok easy. There is a distribution calculator on Vanguard that will do it for me. I must take out around 1/50th of the fund (i assume I am taxed on this) because the life tables say I have around a 1/50th chance of dying this year.

I have some pretty big capital losses so i could just cash out the whole thing although that would not be minimizing taxes...

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pstall Newbie

pstall

Posted
Posted

Ok easy. There is a distribution calculator on Vanguard that will do it for me. I must take out around 1/50th of the fund (i assume I am taxed on this) because the life tables say I have around a 1/50th chance of dying this year.

I have some pretty big capital losses so i could just cash out the whole thing although that would not be minimizing taxes...

Money coming out is ordinary income. The capital losses are what 3 to 3500 carry over for up to 3 years?

You can add to an IRA to lower some tax hit but that depends on eligibility etc.

Not much to avoid in terms of taxes here. Good luck

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