Legal Question in Wills and Trusts in California

Re: Inheritance from Dad's retirement account

If you inherited money from an IRA, you can choose to keep the money in an IRA account, or to take an immediate distribution.

It is much, much better for you from a financial point of view to leave the money in an IRA account and take the minimum distributions each year.

If you take an immediate distribution, the entire amount will be taxed immediately at your ordinary income rates.

I don't know what your individual tax situation is, but as a general rule I'd suggest that you plan to lose approximately 35% of the inheritance to income taxes if you take an immediate distribution. (Many people in CA are in the 25% federal bracket, and most CA taxpayers will pay the maximum 9.3% CA income tax rate. For a personal projection, talk this over with the person who prepares your income tax return.)

Re: Inheritance from Dad's retirement account

In order to best address the issues presented in your inquiry, our office would be happy to provide you with a free 30 minute telephone consultation. Please feel free to contact our office, toll free, at 1.877.MOHEBAN. Ask for Vandy Moheban, Esq. www.lmapc.com