We will be inheriting money n the next few months. It comes from a qualified plan so we’ve been told it needs to go into an inherited IRA. I tried searching the forum but couldn’t figure out how to find “inherited IRA” and not either of the words individually, so i apologize if this has been discussed recently - and I welcome links to those threads.
My understanding is that we have a few options and I’m looking for some clarification/advice, please.
We will be in the top tax bracket this year and next year, so taking the money in a lump sum isn’t a good option right now. The person leaving the money was in her 80s, so I don’t think the life expectancy plan is an option. That leaves the 10 year plan for us, as far as I can tell.
I’m thinking we leave the money in an inherited IRA until our income is lower so we’re not in the top bracket. But, if we took the $12,000 each year and deposited it directly into a tIRA (or deposited an equivalent amount into a 401k), would it basically be a wash, tax wise? We’d be taxed on the withdrawal, but we would offset that with the tIRA or 401k deposit?
What else should we consider with an inherited IRA? Any other ways to minimize tax impact?
My understanding is that we have a few options and I’m looking for some clarification/advice, please.
We will be in the top tax bracket this year and next year, so taking the money in a lump sum isn’t a good option right now. The person leaving the money was in her 80s, so I don’t think the life expectancy plan is an option. That leaves the 10 year plan for us, as far as I can tell.
I’m thinking we leave the money in an inherited IRA until our income is lower so we’re not in the top bracket. But, if we took the $12,000 each year and deposited it directly into a tIRA (or deposited an equivalent amount into a 401k), would it basically be a wash, tax wise? We’d be taxed on the withdrawal, but we would offset that with the tIRA or 401k deposit?
What else should we consider with an inherited IRA? Any other ways to minimize tax impact?