Tax question on inherited accts (inheritance, IRAs, fund, sell)

[FREE866]

I will reach out to my accountant, but figured I'd ask here as well.


Just thinking ahead. When my mom dies is there any type of " inheritance" tax that me or my siblings will incur?
Right now all of her money is with Charles Schwab and we are the designated beneficiaries

She has an IRA and a personal account.

thx

[Rachel976]

Is she rich? Otherwise, no federal estate tax. Some states have a separate inheritance tax, but that usually kicks in at the high levels too.

[ChessieMom]

Has to be a LOT of money there...as stated above.

[KathrynAragon]

Federal law is a percentage of over, I believe, $5 million. Most state laws only kick in on large inheritances as well.

That being said, if she has never paid taxes on any of it, and then you liquidate all or part of your inheritance, you will owe the taxes on whatever you liquidate. That's because SOMEONE is going to pay taxes SOMETIME on every single penny!

When my husband inherited a retirement fund from his parents, it had a required minimum distribution that has to be distributed every year. I believe it's $1400 or something like that, till it's all gone. Anyway, so we have to pay taxes on that distribution every year.

[reed303]

Do speak to an accountant and/or an estate attorney. Meanwhile here is some reading to do re the IRA, which will be the most involved.

https://www.goodfinancialcents.com/n...ited-ira-rules

Is there a will ? Are you its executor ?

[FREE866]

thx guys....now she has ~$900,000 so not close to 5 million....I assumed that once we sell obv we would owe applicable taxes.....lives in NY...

[FREE866]

Originally Posted by reed303

Do speak to an accountant and/or an estate attorney. Meanwhile here is some reading to do re the IRA, which will be the most involved.

https://www.goodfinancialcents.com/n...ited-ira-rules

Is there a will ? Are you its executor ?

There is a will but from what I understand the beneficiary designations in Schwab supercede anything stipulated in the will.....

[pvande55]

Almost all inherited accounts will pass untaxed. The exception is conventionsl IRAs. Since no tax was paid when contribution was made, the beneficiary pays taxes on the whole amount on withdrawal.

[NewbieHere]

I think up to $11 million, maybe $22 million per couple is tax free on the federal.

[k374]

I believe you also get step up in basis so everything is free of cap gains. The step up basis law has never made any sense to me but it's a windfall for those who are inheriting assets.