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April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review

How to Minimize Taxes When You Inherit an IRA

By Kimberly Lankford






JewishWorldReview.com | I am the beneficiary of my mother's IRA. What options do I have for withdrawing the money when she passes away?


You have several options when you inherit an IRA, and the one you choose can have a big impact on how much you pay in taxes. The rules are different for spouses than for nonspouse beneficiaries. They're also different for traditional IRAs than they are for Roths, which generally are not taxed when left to heirs.


If you inherit a traditional IRA, you can cash out the account at any age -- even before you reach age 59 1/2 -- without having to pay a 10% early-withdrawal penalty. But you will have to pay taxes on the money in the account (except for any nondeductible contributions).


If nonspouse beneficiaries don't start taking withdrawals by December 31 of the year after the IRA owner dies, then they must withdraw all of the money in the account within five years. Otherwise, you must take minimum distributions from the account based on your own life expectancy, starting by December 31 of the year after the original owner's death. These required withdrawals are similar to the required minimum distributions (RMDs) for IRA holders over age 70½, but they use a different life expectancy table. The withdrawals will still be taxable (except for any nondeductible contributions), but the rest of the money can continue to grow tax-deferred in the account.


Spouses who inherit a traditional IRA have extra choices. They can roll the money into their own IRA, so they don't have to start taking required minimum distributions (based on their life expectancy) until they reach age 70 1/2. But they'd have to pay a 10% early-withdrawal penalty for money they take from the account before age 59 1/2 .


If the original IRA owner was 70 1/2or older and had already started taking RMDs before he or she died, then the beneficiary can continue to take annual withdrawals based on the original owner's life expectancy schedule or take withdrawals based on his or her own life expectancy.


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The rules are different for Roth IRAs, which can usually be inherited tax-free. But you can't keep the money in the account forever. Original Roth IRA owners don't have to take required minimum distributions, but nonspouse heirs have to take annual distributions from the account based on their life expectancy, starting the year after the original IRA owner dies (spouses have the option of rolling a Roth into their own account). Or you can withdraw all of the money in the account within five years. Either way, you generally won't have to pay taxes on the withdrawals.


For more information about these rules and the IRS life-expectancy tables for required withdrawals, see IRS Publication 590, "Individual Retirement Arrangements."

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Kimberly Lankford is a Contributing Editor for Kiplinger's Personal Finance.



All contents copyright 2013 The Kiplinger Washington Editors, Inc. Distributed by Tribune Content Agency, LLC

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