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Author: 0x6a74 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 63284  
Subject: Re: Inheriting a 401K Date: 2/8/2007 11:46 AM
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The Vanguard information indicates that a child would still have to take the RMD's (required Minimum Distributions) .

I thought I read where they wouldn't have to take those RMD's with the recent tax changes.


no. pretty sure no.

i just went through that .. spent about a week with IRS booklet 509 (or something ..i can find the link if you need it.)

..it said that recent changes made things better, but didn't say how.

as i understand it
child-inherited IRA where parent was over 70.5[*]

has three options: withdraw everything (tax, no penalty);
withdraw everything within five years (tax, no penalty);
withdraw on a schedule using child's life-expectancy ....

penalties are pretty severe if you mess up.

i'm on the 5-yr plan with mom's IRA (trying to maximize growth & minimize tax); my sister went with the 0-yr plan (minimize paperwork)

-jp


[*] (different rules for spouse-inherited, non-spouse/non-child, non-person inherited;
different rules for parent under 70.5, under 59.5 , child over/under 59.5 ... )

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