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  1. #21
    Join Date
    Jan 2019

    Default Re: 401k from My Mother After She Passed (Inherited 401k )

    Quote Quoting budwad
    View Post
    Ok, I think you are correct that next year 2020 OP is required to start taking MRD as a non-spouse beneficiary according to IRS using table 1.
    Good, but actually it is this year. The OP stated that his mother died in December 2018 at age 70years and 10months.

    The rule of thumb is that once a live person reaches 70 1/2 RMD must start whether they remain alive of not. From there it becomes a question of which schedule is to be followed, and can be based on the deceased's age, the beneficiary's life expectancy or a five year or lump sum pay out.

    The government has a vested interest in these funds hitting the economy and being dragooned by taxes. There was earlier this year an attempt to disallow beneficiaries from taking a RMD based on their life expectancy but instead to use a ten year plan. For instance, a 20yo inheriting a $60K plan would now only have a average RMD of $1K annualized for 60 years. Some parts of the government wanted this sped up to a 10 year schedule to boost spending and taxes.

    This failed to get support in the Senate.

  2. #22
    Join Date
    Oct 2019

    Default Re: 401k from My Mother After She Passed (Inherited 401k )

    Quote Quoting pacnw
    View Post
    Tax hit is the same if I take a lump sum or just RMDs percentage wise, correct?
    Okay, let me be more specific.

    Based solely on this money, if I take a lump sum, 5 years or RMDs for my life expectancy how does the tax hit change?
    Can that be answered in general?

  3. #23
    Join Date
    Jan 2011

    Default Re: 401k from My Mother After She Passed (Inherited 401k )

    It will depend on how much is in the inherited account and your tax bracket.

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