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But can he take the whole $90K out of his inherited IRA?

One of the interesting things about inherited IRAs is that you can take out as much as you want to without penalty, as long as at a minimum you take the RMD. You do owe income tax on the disbursement if it is not a Roth that is seasoned. So it could be better for your friend to spread the amount he pulls out of the inherited IRA over a number of years. Better yet, keep it in there and let the retirement funds grow.

Also note that if he wants to keep it as an IRA, it has to be an institution to institution transfer to a specifically set up IRA in his dad's name with him listed as beneficiary.

I'm not a tax pro, but am dealing with my own inheritance this year. I second the suggestion to get legal advice. Sis is the executor of Dad's estate, and unfortunately she did not take my advice to consult a tax pro, or a lawyer, and has been winging it. I am pretty sure that is going to cost us all a good chunk of our inheritance from the way she handled sale of stock, but again, I'm no pro. I just look like one next to my siblings.

Ah well, the Federal Gov't could use some extra income.

IP
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