If you’ve recently inherited a retirement account, you need to consider what you’d like to do with it. Retirement accounts can be complicated, and if you’re now handling another person’s, you may be wondering what you should do. It’s best to consult with an estate lawyer in order to make the best decision for your needs. Today in the Davidson Law Group blog, we’ll give you some general guidelines to consider in the meantime.
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Consider Your Options
The first thing you should do is consider your different options. You can either transfer the money, take the money out, or turn down the money. Each option has its own benefits and stipulations so which option is best for you depends on your situation.
If you inherited the IRA from your spouse, you can simply transfer everything to your own account. This is the easiest route and typically the one that our estate lawyers recommend. However, if you’re not the spouse of the deceased, you’ll need to take a different route.
If you’re not the deceased individual’s spouse, our estate lawyers recommend opening an Inherited IRA account. They work basically the same as a typical IRA account, and you can usually withdraw from them right away without incurring penalties. This is the best course of action if you want the money to continue to grow.
However, if you want the money right away, you can just withdraw everything. Remember that this means you’ll be subject to taxes. You also may enter a new tax bracket, so you’ll need to consider the implications of that. Consult with your estate lawyer to see if this is a good course of action for you.
Finally, you could just choose to turn down the money and allow the retirement account to be distributed to other beneficiaries. The most common reason someone may choose this option is they don’t want the tax effects of inheriting the account. Talk to your estate attorney before making this decision. One of the other options might work better for you.
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Consult with an Estate Lawyer at Davidson Law Group
Choosing what to do with an inherited retirement account is a big decision. You want to make sure to do what’s best for you. Consulting with an estate lawyer can make this decision much easier. They can help guide you through the potential implications of each option in greater depth. For more information and to schedule an appointment, contact Davidson Law Group in Fort Worth, Allen, or Tyler today. We’re happy to help.