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This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

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Taxation of IRA distribution

originally posted: 11/22/2006  reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If in doubt, please send a new question or ask for an update.

Q: I inherited my father's IRA and want to move the money to a trust account. I understand that the withdrawal will be taxable but should I take the whole distribution in one year or spread it out over several years? A: Taxation of IRA

A: Taxation of IRA withdrawals is one of the most complex areas of financial planning. There are ways to minimize the taxes, but several other personal tax variables enter into the calculation. Clearly you should consider all of the options but it is impossible to give a quick opinion here without knowing all of the details and actually calculating the tax effects of each option. The law changes January 1, 2007, so it makes sense to act quickly to preserve your options to include the withdrawals under either the 2006 or 2007 rules, whichever makes more sense for you. Please schedule an hour by telephone to get into this issue in more details.


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