Inherited IRA Strategy

[d2reid]

I'm 67, my folks passed away and left me two Inhereted IRA's. Not a Roth. I have never had an IRA so I don't know anything about them. One of them sends me a Required Minimum Distribution. The other one does not, some kind of new rule. I pay tax on the RMD.

I am looking for advice on how to manage these accounts. My first inclanation was to withdraw the money, close the accounts and roll the cash into my regular investment portfolio. But, correct me if I am wrong, if I do that then the money would be considered income and I would have to pay tax on the lump sum withdrawel. That "income" would probably bump me up into a higher tax bracket for this year.

What happens when I turn 72?

Thanks in advance....

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[target2019]

Whoever is sending the RMD is just drawing from one account. The RMD is based on the total of both accounts, however.

If the accounts are relatively small to you, you always have the option of closing one or the other, or both. Then you're taxed on the entire amount which is withdrawn.

 

[MBAustin]

The rules for inherited IRAs have changed quite a bit over the past few years for non-spouse beneficiaries. Here's a recent article from a trusted source with some info: Inherited IRS Rules Change Again.

It sounds like the amounts are large enough to affect your taxes if you withdraw everything immediately, but not if you take RMDs or partial withdrawals. It might be worth talking with a CPA or fee-only planner to get some advice even if it costs you a few hundred dollars, just to make sure you do everything correctly. Or if the custodian is Vanguard, Fidelity or a bank, you might get some help from them.