"HW "Skip" Weldon" <skip5700removethis[at]hotmail.com> wrote:

- quote -

Smart move.

- quote -

Yes. Those yearly payments were minimums. The only maximum
is the amount in the account. (I'm assuming you didn't do
something silly like buying an annuity.)

- quote -

Yes. There's never a premature distribution penalty on a
withdrawal from an inherited IRA. (Note for nitpickers: if a
spouse elects to roll the inherited IRA into his own IRA, it's
no longer inherited.)

- quote -

Even at the movies they don't ask for THAT much suspension of
disbelief.

--
Phil Marti
Clarksburg, MD

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

<glendale202-mtm10[at]yahoo.com> wrote:

- quote -

I inherit IRA from father. Begin lifetime pay outs based on
my life expectancy. After 2 years my fabulous wife decides
we need to go to Rome for a week. I contact IRA custodian
and request lump-sum payout of $10,000 in order to please
fabulous wife.

1. Having elected lifetime pay outs, can I still do this?

2. While it is taxable, does this one-time partial lump avoid
premature distribution penalty? (Assume I am under 50. No,
make that under 40. Heck, since we are assuming, play like I
am 6'2", blonde hair, blue eyes, 210 pounds and an all-pro
wide receiver.)

-HW "Skip" Weldon
Columbia, SC

----------
Moderator:
Given the income level of an all-pro wide receiver, your
fabulous wife would have insisted on moving to a community
property state where she could file for divorce and show
you how a real premature distribution penalty feels. LoL

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

CFox759 wrote:

- quote -

Any distribution is taxable income to you to the same extent
it would have been taxable to your mother had she lived. In
other words, if the IRA(s) had no cost basis, then the
distribution is 100% taxable income. As a beneficiary, you
would not be subject to any early withdrawal penalty.

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

CFox759 wrote:

- quote -

They did this right. I'm impressed. Bank have been known to
change the title incorrectly (only a spouse can move an IRA
into teir own name from a decedant's account). Beneficiary
account is right.

- quote -

You now have to start taking RMDs (required minimum
distributions) from the IRA by the end of the year after
your mom's passing. You look at your life expectancy in the
year after her passing, and for that first withdrawal, take
the fraction based on that number. Each year after, just
drop the number by one. (you cannot recalculate the number
each year based on tables, as the original owner would have,
just subtract the 1 year)

As a benefiriary IRA, there is no 10% penalty, no matter how
much you take out. Just tax at your marginal rate. I suggest
you take out only the RMD, given the low rate on the CC
debt. If you must take out more, get an idea of where you
are in your tax bracket, e.g. maybe the next few thousand
will be taxed at 15%, but the dollar after that would hit
the next bracket, 25%.

Depending how much money you are looking at, you have the
opportunity to stretch this out through your own retirement.
You are not limited to CDs, you can transfer the accounts to
a broker and choose a low cost index fund (stock funds). The
bank shouldn't charge a fee to break the CDs on the passing
of the original owner.

JOE

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

"CFox759" <CFox759211[at]aol.com> wrote:

- quote -

You will owe income tax on the amount distributed. There is
no premature distribution penalty. See IRS Publication 590.

--
Phil Marti
Clarksburg, MD

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

I recently inherited several Beneficiary IRA's from my mom,
who passed away several months ago. My brother and I went
to the different banks that held her IRA's and they
transferred her accounts into Beneficiary IRA's for the both
of us (split amount in half and each opened our own
Beneficiary IRA account).

Unfortunately, I have a large amount of credit card debt and
would really like to use some of the money to pay off my
credit cards. I live in MD and was wondering if there are
any penalties, other than what the bank would charge, for
withdrawing these IRA's? I have a stable job that pays
quite well and I am steadily paying down my cc debt. Also,
most of my cc accounts have low interest rates (4.99% til
paid off). I am about 6-8 years away from retirement and
already have a really good retirement plan through my work.
I thought if I paid off these cc's and then closed the
accounts, I could invest the money that I pay monthly to
this debt, into my other retirement account. I also own a
home that has a mortgage and an old beach home that is paid
for, although I am thinking of tearing down and rebuilding
in the next couple of years, for retirement. I also thought
if I used some of the money to pay off the credit cards,
when I do re-build at the beach, I will have that monthly cc
money to pay a small mortgage, if I need to take one.
Should I pay off my cc debt first or just keep doing what I
have been doing and let the IRA's earn the interest?
Thanks.

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >