The different ways you inheritassets are just as varied as the assets themselves. Such is the case with aninherited IRA. When is it â€œyoursâ€ and how do you avoid tax issues?
The Slott Report recently addressed the consequences of when asurviving spouse inherits the IRA of their deceased spouse and both havereached age 70 Â½, the age for Required Minimum Distributions (RMDs). Thearticle titled â€œInherited IRA: When do You Own It?â€noted that one must be very careful.
For starters, the inheritingspouse must be the â€œdesignatedâ€ beneficiary. Assuming that is the case, whathappens when your spouse dies in December and has not withdrawn the requiredRMD? Must you as the surviving spouse calculate your RMD on both accountbalances, your spouseâ€™s and your own?
RMDs are always tricky becausethe penalties are steep, with a 50% penalty tax on the amount required but nottaken.
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