Comments on: On my Death, Please, Take a Breath

By: Kelly

Kelly — Fri, 09 Oct 2009 21:22:45 +0000

Excellent advice, Joe!

By: * How To Avoid Inheritance Tax

* How To Avoid Inheritance Tax — Fri, 14 Aug 2009 02:46:52 +0000

[...] council for this or any other financial matter.If you enjoy this article, please check out On my Death, Please, Take a Breath. JoeTaxpayer is the writer behind JoeTaxpayer.com, a blog where he offers financial commentary [...]

By: JOE

JOE — Wed, 30 Apr 2008 18:44:49 +0000

Rachel, it’s always good to get professional advice and not rely on the kindness of bloggers. But – most people don’t know they are about to make a mistake, the opening of the IRA (Which you know is a retirement account) is an every day occurrence, and the initial account is often opened with a thousand dollars or less. In this case, my warning is to help them at least get the initial set up correct, have the beneficiary details set up to avoid a problem down the road. Also, in the States, the tax is paid by the estate of the deceased, not the beneficiary. Again, it’s the IRA that causes confusion, as the money passes with no tax if done right, but is then taxed upon withdrawal. Thanks, again, for visiting.
Joe

By: Rachel @ Master Your Card

Rachel @ Master Your Card — Wed, 30 Apr 2008 13:39:14 +0000

I would certainly seek professional advise on this one. I know that in the UK, if you inherit anything you have to pay inheritance tax and there are ways to get around this legally but it is important to check things out before you risk breaking the law.

By: JOE

JOE — Mon, 28 Apr 2008 21:45:55 +0000

I will work on an article for my May main web post describing the method used for inherited IRA. Thank-you for pointing out that risk.
Joe

By: JAL

JAL — Mon, 28 Apr 2008 17:16:55 +0000

Joe,

In a retirement planning book I read recently, the author related a story of a young man who inherited a sizable IRA from someone other than his spouse, and he managed to somehow roll it into his own existing IRA at another brokerage or bank. He didn’t know any better and presumably was acting without bothering to read any of the handy IRS publications available or without seeking expert tax planning advice. I realize “roll” is not the correct technical term for what he did with the money.

This transaction wasn’t caught for some number of years until an alert financial planner at a brokerage firm he later transferred his IRA to noticed the mistake made earlier and dutifully reported it to the IRS.

The young man not only had to pay regular income taxes and the 10% early IRA withdrawal penalty, he also had to pay additional penalties and interest for failing to report the withdrawal in the year it occured.

Needless to say it was very very expensive and painful mistake… effectively decimating the inherited IRA.

Regards,

JAL