tmm99
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- May 15, 2008
- Messages
- 5,224
My DH and I still don't have wills, but we're finally getting them done - talking to an estate lawyer and trying to get a bank to be our trustee, etc.
So during my research, I realized that a new rule was put in place in December of 2019 that non-spousal beneficiaries who inherit a 401K/IRA will have to drain the account within 10 years of the death of the original account holder (with some exceptions). My tax-deferred accounts are about 70% of my total assets, so it's not small (to me). Once DH and I die and the money goes to a non-spouse, and if this person has to take out at least 10% of it, that will cause a pretty big hit.
I'm sure many of you knew this particular rule, but it was news to me. I was being very stingy about taking partial distributions from my tax-deferred accounts because of the tax hit. I know many of you are doing Roth IRA conversions but as a Canadian resident, I don't have that option anymore, so now, I am thinking of just taking more out of my tax-deferred accounts, take the tax hit and then reinvest the extra in my after-tax account. Actually though, I'm changing my mindset a little - I should spend more money even if it costs more money (taxes) to do so.
I'm just rambling LOL.
What are you doing in your case?
So during my research, I realized that a new rule was put in place in December of 2019 that non-spousal beneficiaries who inherit a 401K/IRA will have to drain the account within 10 years of the death of the original account holder (with some exceptions). My tax-deferred accounts are about 70% of my total assets, so it's not small (to me). Once DH and I die and the money goes to a non-spouse, and if this person has to take out at least 10% of it, that will cause a pretty big hit.
I'm sure many of you knew this particular rule, but it was news to me. I was being very stingy about taking partial distributions from my tax-deferred accounts because of the tax hit. I know many of you are doing Roth IRA conversions but as a Canadian resident, I don't have that option anymore, so now, I am thinking of just taking more out of my tax-deferred accounts, take the tax hit and then reinvest the extra in my after-tax account. Actually though, I'm changing my mindset a little - I should spend more money even if it costs more money (taxes) to do so.
I'm just rambling LOL.
What are you doing in your case?