My two brothers and I inherited a traditional IRA from my mother after she died last year. When do we have to start taking distributions, and how will the money be taxed? -- T.M., Charlotte, N.C.
If your mother had already started taking required minimum distributions from her IRA, you must begin taking RMDs by December 31 of the year after she died based on the life expectancy of you and your brothers. If she hadn’t started taking RMDs, you must either start taking minimum withdrawals by December 31 of the year after she died or withdraw all of the money within five years. You can take the money without having to pay a 10% early-withdrawal penalty, but you will have to pay income taxes on distributions, except for any portion based on nondeductible contributions.
Separate each brother’s share of the IRA into an inherited IRA in his own name so that each of you can take withdrawals based on your own life expectancy. Use Life Expectancy Table 1 in IRS Publication 590-B.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
-
What Is a Qualified Charitable Distribution (QCD)?Tax Breaks A QCD can lower your tax bill while meeting your charitable giving goals in retirement. Here’s how.
-
Embracing Generative AI for Financial SuccessGenerative AI has the potential to reshape how we approach learning about and managing our personal finances.
-
Credit Report Error? They All Mattercredit & debt Don't dismiss a minor error. It could be the sign of something more serious.
-
Insurance for a Learning Driverinsurance Adding a teen driver to your plan will raise premiums, but there are things you can do to help reduce them.
-
Getting Out of an RMD Penalty
retirement When your brokerage firm miscalculates your required minimum distributions, you have recourse.
-
529 Plans Aren’t Just for Kids529 Plans You don’t have to be college-age to use the money tax-free, but there are stipulations.
-
When to Transfer Ownership of a Custodial Accountsavings Before your child turns 18, you should check with your broker about the account's age of majority and termination.
-
Borrowers Get More Time to Repay 401(k) Loans
retirement If you leave your job while you have an outstanding 401(k) loan, Uncle Sam now gives you extra time to repay it -- thanks to the new tax law.
-
When It Pays to Buy Travel Insurance
Travel Investing in travel insurance can help recover some costs when your vacation gets ruined by a natural disaster, medical emergency or other catastrophe.
-
It’s Not Too Late to Boost Retirement Savings for 2018
retirement Some retirement accounts will accept contributions for 2018 up until the April tax deadline.
