Andre1969
Thinks s/he gets paid by the post
Hey everyone,
My grandmother passed away about a month ago, and we're currently in the process of settling the estate. I've run into a little hiccup with regards to proceeds from an IRA I'm getting a portion of.
Initially, my plan was simply to roll it over into another IRA and let it keep compounding, but I just got off the phone with a rep with Fidelity, and he told me I'd have to start taking RMDs on it next year. It's a small amount, only $2800 I'm thinking, so I'm wondering if it's even worth it? So, if you guys and gals were in my situation, would you...
A) just cash it out, pay the taxes, and then do whatever with it or
B) put it into a new IRA, and just start taking the RMDs?
If I cash it out, they'll take about 1/3 between federal and state/local taxes, so that would only leave me about $1800-1900 to play with. I tried plugging the numbers into an RMD calculator, and it said there will be an RMD due for this year of $259, that my grandmother's estate will owe, and then for 2016, I'll have to take out $71, and that slowly goes up until the thing is depleted for the 2053 tax year, when I turn 83. That's presuming it averages 6% per year, so the real results could be greater or less.
I'm tempted to go with B, put it in the IRA, and simply spread it out. I don't need the money, so it would still help it to grow over time, albeit more slowly because of the RMDs. But, I'm wondering if that would create much of a hassle come tax time?
Any insight would be greatly appreciated!
My grandmother passed away about a month ago, and we're currently in the process of settling the estate. I've run into a little hiccup with regards to proceeds from an IRA I'm getting a portion of.
Initially, my plan was simply to roll it over into another IRA and let it keep compounding, but I just got off the phone with a rep with Fidelity, and he told me I'd have to start taking RMDs on it next year. It's a small amount, only $2800 I'm thinking, so I'm wondering if it's even worth it? So, if you guys and gals were in my situation, would you...
A) just cash it out, pay the taxes, and then do whatever with it or
B) put it into a new IRA, and just start taking the RMDs?
If I cash it out, they'll take about 1/3 between federal and state/local taxes, so that would only leave me about $1800-1900 to play with. I tried plugging the numbers into an RMD calculator, and it said there will be an RMD due for this year of $259, that my grandmother's estate will owe, and then for 2016, I'll have to take out $71, and that slowly goes up until the thing is depleted for the 2053 tax year, when I turn 83. That's presuming it averages 6% per year, so the real results could be greater or less.
I'm tempted to go with B, put it in the IRA, and simply spread it out. I don't need the money, so it would still help it to grow over time, albeit more slowly because of the RMDs. But, I'm wondering if that would create much of a hassle come tax time?
Any insight would be greatly appreciated!