A 50-year-old married friend (father of 2 kids -- ages 17 and 10) just had both of his parents die within two months of each other. Most of their estate is in after-tax IRAs.
He has done some research and thinks these are his only 2 options:
1) Take the money as a lump sum and pay taxes on what their money earned (so if it was a $30K after-tax Non Qualified IRA, and it earned $3K, he pays taxes on the $3K, not the $30K)
2) Take the IRA in installments based on his age. So if he lives 20 more years, he just takes it in installments, so after he retires in 10 years he'll pay less in taxes those final 10 years since he won't have his exorbitant mega-corp salary.
I know there must have been others here faced with similar situations. I'm wondering if there might be some other options or strategies he could use?
FWIW, he is well-employed at a mega-corp. His wife has been a teacher 'forever' in a good school system, so she will get a decent pension. His kids are both doing great in school and will be going to college.
As his younger child will finish college when my friend is 62, he was planning to probably keep working until that kid graduates. Although, as his parents were rather frugal, depending on the size of their estate, this might precipitate an earlier-than-planned retirement.
omni