Messages

1

General Discussion / Managing an inherited IRA

« on: November 14, 2019, 05:51:12 PM »

Hi,

I am managing an inherited IRA for my mother in law. I don't really agree with the funds that it holds. Some are too high risk for this market and some are invested in some odd things.

Any thoughts on a strategy on how I should go about dismantling the funds. I obviously don't wish to sell everything overnight and take new positions.

Thanks

Dav

2

Taxes / Re: Inherited IRA in a Trust - Taxes ?

« on: October 29, 2019, 10:40:54 PM »

Thanks for your speedy reply !!

3

Taxes / Inherited IRA in a Trust - Taxes ?

« on: October 29, 2019, 02:08:38 PM »

Hi there,

Recently my father-in-law passed away. The lawyer that created his living trust said, all accounts should go to the trust. After his passing, we learned that was not the best thing to do. As his IRAs had the trust as the beneficiary. My mother-in-law is the beneficiary. Unfortunately, she does not have too long, perhaps 2-3 years. I am now charged with trying to figure out how best to grow the funds and do the best thing from a tax perspective as my wife will inherit the trust.

I understand that the trust needs to be treated like a living entity, i.e. we need to file taxes. As the end of 20119 is not far, I am trying to do some tax planning. I read that the trust will be taxed on earnings.  See here (https://www.thebalance.com/2015-income-tax-brackets-estates-and-trusts-3504855). But, I am not sure how that can work, as the IRAs are inherited but inside of a trust. Will we need to pay tax on the gains within the mutual funds and again by my mother-in-law, she takes the required RMDs ? Or do they mean taxes due by the trust when monies are not in an inherited IRA but still in the trust? For example, interest earned when mutual funds are sold from the inherited IRA but monies are just sitting earning interest and not withdrawn via an RMD shortly after mutual funds are sold.

Any thoughts and guidance would be great.

Thanks in advance - sorry for the complex question.

4

Taxes / Back Door Roth Conversion

« on: October 29, 2019, 01:32:50 PM »

Hi,

Firstly, thanks for this excellent blog. Hats off to you for doing this.

So I have an IRA that I have been contributing for the last few years. Because income level was too high I was not getting any tax breaks for contributing, but still continued as a way to invest and have the chance to be taxed deferred.  It turns out I took no action with these funds, it just sat there as I thought how to do this conversion stuff. Last year it earned a total of $75. As I didn't do much of anything with these funds when I do my conversion will probably just be paying tax on the $75 that was earned. Or will I pay taxes on the total amount I try to convert ?

Is it best to convert in one sweep or over the years?

Thanks in advance

Tiberius