Inherited IRA withdrawal help

[Loomie21]

My grandfather recently passed an my mom inherited a portion of an IRA. Does she have to leave this in the IRA or else be penalized for an early withdrawal or is she able to withdraw without the 10% penalty?

 

[Dawgsauce]

My grandfather recently passed an my mom inherited a portion of an IRA. Does she have to leave this in the IRA or else be penalized for an early withdrawal or is she able to withdraw without the 10% penalty?

No penalty for her, but someone else will need to explain taxes on it.

 

[herbsinator]

No penalty for her, but someone else will need to explain taxes on it.

Yeah I also believe this is correct. Hopefully OP has access to an estate planning attorney and/or tax accountant

 

[Loomie21]

Currently have access to nothing and she just learning about what she will get. We can get access but to be blunt we are TPB poor family.

 

[Dawgsauce]

Currently have access to nothing and she just learning about what she will get. We can get access but to be blunt we are TPB poor family.

Well, like @herbsinator said need to get some solid advice from an attorney/accountant. I'm a dumb dumb with all this, but I think taxes are something that can be worked with depending on how it's all handled. Where ya at @Jim14510

 

[HCFord1]

Currently have access to nothing and she just learning about what she will get. We can get access but to be blunt we are TPB poor family.

@Jim14510

 

[Gman1228]

1. Assuming your Grandpa passed away this year, and he was in Required Minimum Distribution status, his Required Minimum Distribution will have to be taken this year.
2. The year of death is considered Year 0. Your mom will have to have the funds out of the Inh IRA by the end of the 10th year following the date of death.
3. Your mom will have RMDs every year 1-10 but they won't be significant enough to have all funds out of the Inh IRA by end of year 10 she will need to accelerate them.
4. All distributions your mom takes will be taxable income (assuming all funds are pre-tax) unless she is over 70.5 and is utilizing a Qualified Charitable Distribution.

To Confirm: No 10% early withdrawal penalty for your mom.

 

[Jim14510]

1. Assuming your Grandpa passed away this year, and he was in Required Minimum Distribution status, his Required Minimum Distribution will have to be taken this year.
2. The year of death is considered Year 0. Your mom will have to have the funds out of the Inh IRA by the end of the 10th year following the date of death.
3. Your mom will have RMDs every year 1-10 but they won't be significant enough to have all funds out of the Inh IRA by end of year 10 she will need to accelerate them.
4. All distributions your mom takes will be taxable income (assuming all funds are pre-tax) unless she is over 70.5 and is utilizing a Qualified Charitable Distribution.

To Confirm: No 10% early withdrawal penalty for your mom.

Pretty much covers it. Only thing I'd add is that whether she takes it all in year one or ten or spread out over 10 years depends on what her (and dads?) income is. Might be a happy spot where she can hit the top of the lowest bracket possible.

Answer could be get it out as early as possible at the lowest possible tax where she takes it in years 1-3 and might be the opposite where she wants to leave it as long as possible and that estimated sweet spot is years 7-10. Would still have RMD's as gman said but that's typically a small percentage of the value. Like 5ish%.

 

[HuskerDocCo]

My grandfather recently passed an my mom inherited a portion of an IRA. Does she have to leave this in the IRA or else be penalized for an early withdrawal or is she able to withdraw without the 10% penalty?

Shroomi Loomie let’s meet up, have a blunt (101 I know haha FUCK BELLLCHH) and figure out this sumbitch issue. I’ll be at the coop tomorrow at 6am

 

[TampaBaySkers]

Currently have access to nothing and she just learning about what she will get. We can get access but to be blunt we are TPB poor family.

Lucky for you AI has already replaced loser lawyers. Don’t waste your money on an attorney

Per chatGPT

If she Inherited an IRA​

• Early Withdrawal Penalty: No 10% early withdrawal penalty applies on distributions from an inherited IRA, even if the beneficiary is younger than 59½.
• Taxes:
  • If it’s a traditional IRA, distributions are taxed as ordinary income.
  • If it’s a Roth IRA that was held at least 5 years by the original owner, withdrawals are tax-free. If not, earnings could be taxable.
• Required Withdrawals:
  • Under the SECURE Act, most non-spouse beneficiaries must withdraw the entire account within 10 years of the original owner’s death.
  • A surviving spouse has more flexibility (can treat it as their own IRA or use inherited IRA rules).

 

[Loomie21]

Thank you all for your help! We truly appreciate it!

 

[V-Doub]

Thank you all for your help! We truly appreciate it!

I inherited a traditional IRA this year. From what my attorney told me, I have to withdraw the entire amount (or transfer over to my personal ROTH IRA) within 10 years of receiving the inheritance. I can take out the whole thing in year 9 or piece by piece over the 10 year period. I’ve mostly left it alone for now, but when I transfered 10k over to my personal ROTH IRA I paid about 18% in taxes. Now I’m not sure if there was a fee in there for my financial advisor, but when I transferred over 10k I actually got about $8,500.00. $1,500 went to taxes and/or fees. Don’t know if that helps, but that’s my experience.