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Greetings, Entango, and welcome. You asked:

<<My mother-in-law passed away, and she had named my wife as her beneficiary.
How does she get the proceeds? In a lump payment?
I know there is no 10% penalty, but when she gets the money, is it immediately taxed as income at our current tax rate or is there some exception?>>

How your wife takes that money depends on whether your MIL was receiving mandatory distributions before she died. For how your spouse may take that money, see my article "Designating Beneficiaries" at: It may also depend on the IRA adoption agreement your MIL signed. For info on that, see my article "Have You Checked Your IRA Lately" at: However she takes the money, be assured she will be taxed at ordinary rates on the amount she takes in any year. A penalty will not apply.


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