401K
- Thread starter Captfrankie
- Start date
Wally
BrownCafe Innovator & King of Puns
How will the rule changes affect heirs inheriting a Roth?
They got the tax money on what went in but not on the growth
bottomups
Bad Moon Risen'
I'm in the same boat. Have an inherited IRA from my mom. Have 10 years to deplete the account but must take out at least the RMD each year. I'm in year three now and just withdraw enough each year so that it doesn't bump me into a higher tax bracket. I'm leaving the majority alone to let it grow but will most likely get spanked with a large tax bill in year 10.
You better be careful because if you take out too much it can screw up your Medicare
oldngray
nowhere special
For 2024 if your income is over $103,00 your Medicare premiums go up from $174.70 to $244.60. That goes up too. Single payer with income over $500,000 pays $594/month.
And that's not even taking into consideration that the current lower tax rates we are in expires at the end of next year
The percentages will go up in the brackets will come down
That could be a lot more money given to the government
oldngray
nowhere special
For a lot of people its a good idea to start taking distributions before you start collecting Social Security.
That's what I'm going to do.
Take it out of my 401k and leave my Roth IRA alone
Over70irregs
Well-Known Member
The fact that we hv to tip toe around taking $ is a problem. Saying that a lot of people would love to hv that problem. (Perspective)
Coldworld
Well-Known Member
So if daddy is on his deathbed should he just convert all his investments into a Roth 401k pay the taxes so when kiddo's inheritance come then the first step in paying taxes is already done??
Coldworld
Well-Known Member
Unfortunately they are doing this to catch some of these big wigs who use to just keep millions and millions in these 401k and Ira's for years only taking out the absolute minimum when they received an inheritance from daddy. Unfortunately the poors like ourselves who have nowhere near that kind of money in there are caught in the crossfire and are the ones who are going to get screwed...especially those who have no retirement except for maybe a few thousand from an inheritance.
If he converted it all at once it might be a bigger tax bill and you would get less.
I not leaving my kids anything!
I don't want to burden them with having too much money
It's not cheap when you get older.
You still have 10 years to withdraw the full amount but you don't pay taxes on it, so you can let the whole thing sit in stocks for 10 years and then withdraw everything tax free if you want. Another strategy would be to withdraw enough every year to max out your own Roth IRA.
Yeah, you gotta do some arithmetic to figure what works best but ultimately someone is gonna pay those taxes, either the primary owner or the beneficiaries. If your goal is to help out your heirs then 9 times out of 10 the best play is to pay those taxes yourself to give them more flexibility in how they take their payouts.
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