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| wallace6 |
 Posted: Fri Mar 18, 2005 8:18 am Post subject: IRA left to us |
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Investing Sr. Associate
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| My husband's mother recently died. She left us her IRA. Do we have to keep that money in an IRA or can we use it elsewhere? |
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| noksagt |
| Posted: Sun Mar 20, 2005 12:46 am Post subject: |
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Member of the Month! March
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You aren't allowed to make additional contributions to the inherited IRA nor combine it with an IRA you made for yourself.
If you cash it out, their are distribution rules you need to be aware of. These depend on whether death occurred before the beginning date for distributions. Either of these must be satisfied:
* Rule 1: Receive the entire distribution by 12/31 of the 5th year following the year of the owner's death.
* Rule 2: Receive the entire distribution over your life, or over a period not extending beyond your life.
If the original owner didn't choose which rule to use, you have to choose by December 31 of the year following the year the death occurred, because that's the last day to start receiving distributions under Rule 2.
The reason you may want to delay cashing it out all-at-once is taxes. I'd consult a financial planner who was familiar with your tax situation. |
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