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Inhertited qualified IRAs from parents

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  • Inhertited qualified IRAs from parents

    Good Day,
    I am looking for any advice. I am about to inherit about 140k in the forms of qualified 403b from my recently deceased Mother. My Father died 2 years prior. I have been told take it all at once as I am in the 35% bracket and taxes are historically as low as they will be given our current tax scheme after DJT was elected. I know it will boot me into the 37% bracket if this income is added. I don't have to take it until the end of 2020. I know all the options to do it over 5 years, lump sum, or life expectancy ( I am 53) but with the stock market being as high as it is currently. Political winds may change and the tax decreases enacted by Trump may be reversed and may be higher if others are elected. I am an employed doc and cannot do the full 56k for profit-sharing/401k but have a 457 and 403b which I am maxing out. Any advice would be helpful. Of course the financial guy my Mom wants to keep it as long as he can. I know I can dump it into an indexed fund with 0% fees such as fidelity. Thank you and happy holidays.

  • #2
    I will be interested in what the actual tax professionals post about this. There is a bill eliminating the stretch IRA out there but I do not think it is law yet. I would stretch it out as long as legally possible. I would put it in a taxable account in a general index at Fidelity, Vanguard, or Schwab. The only reason to take a lump sum would be if you were certain taxes were jumping next year and you would be in a lower bracket now. The money is growing in a tax protected manner now.


    • #3
      sorry about your situation.
      forget the politics please. 35% is not low enough to consider withdrawals, and depending on your future situation hard to overcome.

      i would roll it over to an inherited IRA and draw out payments over your life expectancy either at vanguard/fidelity/schwab etc not under the control of any FA.
      when you retire or switch jobs or take a year off etc etc consider pulling out more during low marginal tax rate years.


      • #4
        I’m sorry about your parents. Take advantage of current laws (agree 100% with Peds, leave out the politics) and stretch as long as you can. You don’t have to leave it with your Mom’s guy to have an inherited IRA, just file the paperwork. No f2f convo necessary.

        Welcome to the forum!
        Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087


        • #5
          Stretch it as long as you can. Low cost brokerage and low cost investments, you know the drill.
          Fidelity is one of many perfectly acceptable choices. If your mother was required to take RMD's, that may change your tactics and when you wish to convert it to an inherited IRA. Do not rely on your FA for the timing decisions.


          • #6
            Thank you for the very informative responses!! Sorry about politics and the stretch option is likely the best option for me. These inherited funds are not needed now and I am no where near retirement at age 52. I always appreciate insightful advice from others.


            • #7
              If you don't really need the $ and you have children you could consider "disclaiming" (your wife also has to disclaim it) the IRA and then it could go to your children and the RMDs would be at their age. You'd have to check how the beneficiary clause of the account is written. We did this with my father's IRA and Roth IRA and our children are taking much smaller RMDs than we would have been forced to take, so it will "stretch" a lot further.