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Dear Fools - My aunt left me and my wife about 150k in 2 different life insurance annuities a few months ago. I'm not sure if this was through her work and if that matters, but I wanted to know the best way to take that money and invest it in stocks while paying the least amount of taxes. Is it better to withdraw slowly over the next few years or take it out immediately? We also have 3 kids and we could put some of the money in their college accounts if that helps lower the tax cost. It should also be noted that my aunt was from Massachusetts while we live in Connecticut if that makes a difference.

Any info. is appreciated.

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No. of Recommendations: 5

I am sorry for your loss. What a time of year for that to happen.

When Dad passed, we were able to question the folks who held the money we would inherit as to what the tax burden would be given our options. Some would be taxable no matter what, some could be rolled over to an inherited IRA and only the RMDs would be taxed, others still could be left with the company, but only for 5 years, at which point full distribution would have to be made. Since there are so many flavors of annuities, depending on how they were held, the folks who have the money invested would be the first to question as to your options. The info as to what the tax treatment would be if you took it from their account is the first step in knowing what to do next.

Best wishes for a wonderful new year,

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