Advice on taking money out of retirement fund
Terry, my mother died a few years back and left me and my siblings a stock and cash portfolio around a half a $1 million each. I would like to take money out now and my wife is saying that we’re going to get penalized tax wise. Can you explain to me when is the best time to take money out of my retirement fund. It’s not all of it but some for traveling. I’m confused. Thank you.
Terry Says
Wait, please write back and explain how this account is titled.
Did your mother leave you an IRA or other retirement account? If so there are rules, and it must all be withdrawn by the end of 10 years. And you must pay taxes as ordinary income on the withdrawals. And it could impact your Medicare Part B premiums. Your accountant can explain.
Did your mother leave stocks and cash in a brokerage account? And if so, was the money divided between the three of you equally? And was it put into an account in your name?
If so, your cost basis on the stocks is the value on the date of death. If they have appreciated, you would owe capital gains taxes on any profits. You can withdraw the cash from a non-retirement account with no taxes or penalties.
If the money is not inside a retirement account, there is no “penalty.”
If the money is inside a retirement account, you pay ordinary income taxes on the withdrawals.
Please write back with details, or I can refer you to a financial advisor you can trust. Read this article: Wealthramp
