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Inheriting an IRA? Know Your Options to Minimize Taxation

Whether you have a retirement account or are inheriting one, if you want to know how to minimize taxes, you need to fully understand all your options.

You may already know that Albert Einstein once stated "compound interest is the most powerful force in the universe." What you may not know is how to leverage compound interest through future generations.

Many of my clients have been faced with an important decision: How to minimize income taxes while inheriting an IRA.

According to IRS Publication 590, the beneficiary of an IRA has three choices:

  • Lump Sum
  • Deplete balance within 60 months
  • Required Minimum Distributions

Watch this video as I explain the power of compound interest.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Randy1949 August 24, 2012 at 04:38 PM
True. IRAs are not like a regular inheritance. You will pay taxes when you take distributions. This is especially frustrating when the IRA is invested in funds that you normally would not want to have, at a financial company one would not normally wish to patronize. There seems to be no option for a rollover.

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