Tax planning and particularly planning to minimize taxes on inherited retirement accounts requires attention to detail, dotting the "i's" and crossing the "t's". There are many requirements and deadlines that, if not met, may cost your family thousands of dollars in taxes and loss of the tax deferral growth. You have until September 30th to review and remove beneficiaries. You have until December 31st to divide the IRA and take full advantage of large age differences between the beneficiaries on similar issues.
Distributions for Joe and Martha (each) |
||||||
Elapsed Years |
Calendar Year |
Beneficiary Age |
MD Factor |
Interest Earned |
Annual Distribution |
Year-End Balance |
1 |
2011 |
66 |
20.2 |
$20,000 |
$24,752 |
$495,248 |
5 |
2015 |
70 |
16.2 |
$18,928 |
$29,210 |
$462,927 |
10 |
2020 |
75 |
11.2 |
$16,158 |
$36,066 |
$384,029 |
15 |
2025 |
80 |
6.2 |
$11,148 |
$44,951 |
$244,894 |
20 |
2030 |
85 |
1.2 |
$2,836 |
$59,086 |
$14,653 |
21 |
2031 |
86 |
0.2 |
$586 |
$14,653 |
$586 |
Total Distributions over life of IRA |
$783,920 |
Distributions for Martha |
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Elapsed Years |
Calendar Year |
Beneficiary Age |
MD Factor |
Interest Earned |
Annual Distribution |
Year-End Balance |
1 |
2011 |
36 |
47.5 |
$20,000 |
$10,526 |
$509,474 |
10 |
2020 |
45 |
38.5 |
$23,262 |
$15,105 |
$589,705 |
20 |
2030 |
55 |
28.5 |
$25,791 |
$22,623 |
$647,932 |
30 |
2040 |
65 |
18.5 |
$25,205 |
$34,061 |
$621,279 |
40 |
2050 |
75 |
8.5 |
$17,684 |
$52,013 |
$407,780 |
48 |
2058 |
83 |
0.5 |
$1,658 |
$41,439 |
$1,658 |
Total Distributions over life of IRA |
$1,517,911 |