At 75 are taxes less or more on closing my IRA;s vs. my daughter inheriting and paying taxes? Tax payments will come from the IRA’s principal so I’d like to know the best way
to save the money.
Terry Says: Your daughter can inherit the IRA — and roll it into her own IRA where it can grow tax-deferred. But remember that at your age, you are required to take a minimum distribution every year, which your IRA custodian will calculate for you. That money is taxed as ordinary income, added on to your other income such as Social Security, and taxed at your marginal rate. So if you don’t need to take additional money out of your IRA for living expenses, it makes sense to explain to your daughter that she will inherit it and should ROLL IT OVER to keep it growing for her own retirement, instead of taking out the cash and paying taxes.