IRA Inheritance
Last year I inherited an IRA from my mother after her death and I deicide to maintain the account at the same financial institution. The financial institution and I processed documents for the IRA inheritance into a new account. The account only generates 0.02 a month, and I am dissatisfied with the banking institution. The IRA was taxed in 2024 after I received a stiffen less than a year after her death. I want to withdraw the IRA, close the account and reappropriate the monies into another account (CD) with a better return on the funds at a different financial institution. Do you have any advice how to best manage this transaction with the bank, is there a penalty or additional taxes incurred for deciding to withdraw the funds in the IRA to incorporate into a Certificate of Deposit?
Terry Says
Well, wait. You don’t want to pay taxes on that money. And there are better ways of handling this.
First of all, had your mother started taking RMDs from that account? If so, the institutions should have let you know that you must continue taking those taxable withdrawals.
If not, and you rolled it into an “inherited IRA”, you have 10 years to withdraw all the money. In the meantime, it will grow tax-free. The obvious answer seems to be — but not necessarily — to wait until the 10 th year to withdraw. BUT, that could generate a huge bump in income taxes (and impact your Medicare Part B and D premiums) if you take it all in one year.
Meanwhile, it’s easy to do a ROLLOVER, but you must first take this year’s RMDs if required because of your mother’s initiation of RMDs.
If you want to earn more, you could do a rollover to Fidelity or Vanguard and ask them to put it in the government securities money market fund, where it should earn around 4%.
Read this for instructions: https://www.terrysavage.com/rollover-now/
