4-minute Money Ideas

Avoid Making This Mistake with an Inherited IRA By Douglas Goldstein, CFP® If you are the beneficiary of an inherited IRA, avoid immediately withdrawing the money. If you make an immediate withdrawal, you might forfeit the tax-deferred status of the account and be subject to paying taxes. A proper withdrawal strategy for an inherited IRA can minimize your tax bill. What you need to know when you inherit an IRA In an effort to encourage savings, America lets the assets inside an IRA account grow tax deferred – owners only pay tax once the funds are withdrawn. If you are the beneficiary of an IRA, depending on how you title the account and withdraw the assets, you too can take advantage of tax-deferred growth. Any mistake made in titling, transferring, or withdrawing funds may not only cause you to lose future tax-deferred growth, but also may make you liable to pay current taxes on the funds. To maintain the tax- deferred status, your new account must be coded as a “beneficiary IRA” by the custodian of the acc