If you inherit an IRA, you need to carefully consider your options and tax consequences.
Americans hold a staggering amount of wealth in individual retirement accounts. It is far more wealth than the current account holders could ever possibly spend in their own lifetimes.
That means that many people who have IRAs will eventually pass them on to their beneficiaries.
While that can be great news for those who inherit the accounts, it can also turn to bad news, if the beneficiaries make the wrong decisions about what to do with those accounts.
Recently, Forbes discussed what some possibilities are for beneficiaries in “What To Do If You Inherit an IRA.”
The single most important thing to keep in mind is that an inherited IRA can be the source of lifetime payments or it can be a source of a very large and immediate tax bill.
If you are smart, then you will want it to be the former, unless you absolutely need a large sum of money right away.
The general rule of thumb is that you should never take more out of an inherited IRA than you are absolutely required to take by law. It is recommended that you take no more than the required minimum distribution.
The exact amount will depend on several factors.
That is why you should never make a decision about what to do with an inherited IRA without first seeking the advice of attorneys and accountants.
Reference: Forbes (July 10, 2017) “What To Do If You Inherit an IRA.”