This. Depending on your age and plans for retirement, the optimal tax strategy is take larger distributions when you have less (other) income. That strategy will likely keep you in lower brackets when you take larger distributions towards the end of the 10 year depletion requirement. If income is consistent throughout the 10-year time frame, then equal payments would be a tax-neutral depletion strategy.Usually, the RMDs for inherited IRAs are quite small compared to the balloon payment you'll be required to take when you drain the account at the end of the holding period. Is this OK with you, or do you think that you'll need to take more money out during the holding period? Meaning, would you like equal payments throughout.
One other thing to consider (and I posted it in another thread) is to use distributions from the Inherited IRA for taxes. That is, if you are required to pay estimated taxes, you can take a distribution from the Inherited IRA in December and withhold up to 99% of the distribution to meet your entire yearly estimated taxes (from any sources) without running the risk of under withholding throughout the year. RMD tax withholdings are considered ratable (paid throughout the year).
Statistics: Posted by goodenyou — Fri Nov 29, 2024 8:00 am — Replies 14 — Views 1547