Fools can you help me. I must withdraw about 900,000 in IRA's starting in 2000. It looks as if Uncle Sam will get a bunch. Anyway to avoid these huge taxes ?One Wag said __ yes __die. Any other options, I thought about a Charitible Lead Trust, or Charitible Annunity. I would rather give it away than pay the IRS.
Greetings, Achiles, and welcome. You asked:<<Fools can you help me. I must withdraw about 900,000 in IRA's starting in 2000. It looks as if Uncle Sam will get a bunch. Anyway to avoid these huge taxes ?One Wag said __ yes __die. Any other options, I thought about a Charitible Lead Trust, or Charitible Annunity. I would rather give it away than pay the IRS.>>Nope, there's no way around it. Someone ultimately will pay income taxes on all the money that's been deferred within the traditional IRA. You will during life or your heirs will after death. The only way you can avoid it is to die and leave the IRA to a church/charity. As a non-taxable entity, a church/charity won't have to pay the income taxes due when the IRA is distributed. That seems a rather drastic way to avoid the tax bill, though. Take the required minimum distribution, pay your taxes, and rejoice. It's better than the alternative or a poke in the eye with a sharp stick any day. :-) Remember, too, the penalty for not taking what you must is a penalty of 50% on the amount not taken. And then when you do finally take it, you get to pay the usual taxes on it, too. So you decide what's better. Personally, I'll take the taxes.Regards..Pixy
Maybe it would help if you thought about what those taxes are paying for:* the roads you drive on* the public schools your children/grandchildren (or friends' children) attend* the Medicaid/Medicare you will eventually use for medical bills* the parks you like to visit* getting electricity to people who live in rural areas (the REA--I was a beneficiary of this when I was a child)* the post office* federal regulatory agencies--pick your favorite thing and I bet it's regulated to be a better quality article or service because of a federal agency* tax breaks for your favorite charities (face it, if we didn't pay as much in taxes, they would have to)* add you own.....yeah, we all complain about taxes, but we do get a better life because of it.Selphiras
I have a similar situation in about 4 years. Get IRS Publication 590 to find out your limited options. One way to reduce the yearly withdrawels required is to name a younger beneficiary to the IRA's. But be aware that the IRS has a table (in 590) that requires a minimum withdrawel. At age 70 the divisor is 26.2 which means that you need to divide the values of all your IRA's by that divisor to determine the minimum withdrawel (in your case that's less than $40K). In subsequent years you recalculate the withdrawel amount using the applicable divisor. Looks like you can withdraw about $40K a year and add that to your income.The tax bite should be about 28%-31%.Be grateful that you can pay taxes and still eat.
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