Another great article. Funny enough, my grandparents didn't have retirement accounts, just brokerage investments. I got the step up basis when I inherited it but I'll have to pay the long term capital gains taxes when I withdraw. Thankfully, I can wait until my lowest income years to take it- no 10 year rule on those accounts. It gives me more to think about when considering my own rollover and withdrawal strategies vs. The taxes inheriting what's left will inflict on the kids.
My understanding is that the 10 year rule for liquidating only applies to IRA’s inherited after 2020? If the IRA was inherited before then the 10 year rule does not apply. Is that correct? If so, can you keep the inherited IRA and take the yearly distributions.
This doesn’t seem a difficult nut to crack; don’t set up the Traditional IRA to pass to a “high earner”, rather put it into the name of one or more children who have no income, and let it fund their college education, which will also be like financial assistance to the parents.
QCD’s. Qualified Charitable Deductions at age 70.5 from your inherited IRA. If your elderly relatives are charitable minded, they can gift their RMD’s to charity. They can leave their IRA money to kids in a lower tax bracket. Seek out a CFP and estate attorney for more complex planning.
I'm not a high earner but I still want to minimize the tax hit. I inherited my mother's traditional IRA. I have the account set up to notify me when an asset hits a 52 week low. When that happens I move some of that asset out of the IRA. I have a spreadsheet set up to track values and withdrawals. Every year I estimate how much I'll need to withdraw that year so that the account will be empty by year 10.
And Vanguard has no idea what I am asking them about. What's the IRS reg that requires the decedents name be in the name/title/description of the account? I can't find it. If I change the name of the Inherited Roth mow, 5 yrs later and IRS audits me sometime 10 yrs down the road, am I going to be penalized?
I’ll talk to our CFP about this on behalf of our son as we have several IRAs - thanks for the information!
Another great article. Funny enough, my grandparents didn't have retirement accounts, just brokerage investments. I got the step up basis when I inherited it but I'll have to pay the long term capital gains taxes when I withdraw. Thankfully, I can wait until my lowest income years to take it- no 10 year rule on those accounts. It gives me more to think about when considering my own rollover and withdrawal strategies vs. The taxes inheriting what's left will inflict on the kids.
Appreciate you, Christina.
The step up in basis is one of the best tools to leverage for non retirement accounts.
If you plan your IRAs right for your kids it can give them a big head start.
It is difficult to understand and assimilate. I am saving this post to study it again. Thank you so much for sharing.
My understanding is that the 10 year rule for liquidating only applies to IRA’s inherited after 2020? If the IRA was inherited before then the 10 year rule does not apply. Is that correct? If so, can you keep the inherited IRA and take the yearly distributions.
This doesn’t seem a difficult nut to crack; don’t set up the Traditional IRA to pass to a “high earner”, rather put it into the name of one or more children who have no income, and let it fund their college education, which will also be like financial assistance to the parents.
Does any of this matter if you're already going to be in the highest tax bracket?
QCD’s. Qualified Charitable Deductions at age 70.5 from your inherited IRA. If your elderly relatives are charitable minded, they can gift their RMD’s to charity. They can leave their IRA money to kids in a lower tax bracket. Seek out a CFP and estate attorney for more complex planning.
I don’t have WhatsApp. And I’m a CFP.
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I'm not a high earner but I still want to minimize the tax hit. I inherited my mother's traditional IRA. I have the account set up to notify me when an asset hits a 52 week low. When that happens I move some of that asset out of the IRA. I have a spreadsheet set up to track values and withdrawals. Every year I estimate how much I'll need to withdraw that year so that the account will be empty by year 10.
And Vanguard has no idea what I am asking them about. What's the IRS reg that requires the decedents name be in the name/title/description of the account? I can't find it. If I change the name of the Inherited Roth mow, 5 yrs later and IRS audits me sometime 10 yrs down the road, am I going to be penalized?
Could you explain it a little bit more about the titling rule? My Inherited IRA at Vanguard doesn't have my mothers name in the title.