Wednesday, September 28, 2016

Seek expert advice for dealing with inheritances

Inheritances received after the passing of a loved one have important estate, financial, and tax planning implications for the beneficiary.

Inherited Individual Retirement Accounts (IRA’s) are subject to specific rules on taxable and non-taxable distributions that depend on a multitude of factors. Things such as the relationship between you and the person who left you the IRA, their age, the type of IRA, whether the person was already receiving distributions from the IRA, whether you were named as a beneficiary or inherited the IRA under a Will, how many beneficiaries are named, and several other factors — some of which are time sensitive. Additionally, you may find that many of the distribution penalties and restrictions that apply to a traditional IRA also apply to an inherited IRA. 

Experts advise meeting with a trusted adviser to discuss your options before making any decisions. Given the complexity specific to inherited IRA’s and the multiple factors that could influence your tax liability and other penalties, you are wise to seek an expert opinion before making any withdrawals. We suggest consulting a local estate planning attorney, financial planner or Certified Public Accountant (CPA) to discuss your specific circumstances.