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John Legal
John Legal, Attorney
Category: Legal
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Experience:  Over 15 years legal experience.
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My spouse died in 2007 and I inherited a simple IRA. I am 57

Resolved Question:

My spouse died in 2007 and I inherited a simple IRA. I am 57 years old with an income of 7,000 per year.
I would like to move to a investment account and withdraw 20,000 per year without paying a penalty.

What is the best way to do this??

Thanks
Submitted: 1 year ago.
Category: Legal
Expert:  John Legal replied 1 year ago.
Welcome! Thank you for your question.

How much is in the IRA account?
Customer: replied 1 year ago.

250,000

Expert:  John Legal replied 1 year ago.
That is certainly possible and very easy. Most competent investment advisers should know the rules and be able to advise you how to do this. I would suggest using a large brokerage house or a local adviser that keeps your funds at a large brokerage house.

All you need to do is roll the IRA over into new IRA in your name. This new IRA will be known as a spousal roll over IRA. This will allow you to defer the tax in the investment account until you take withdrawals. While this is still an IRA account in your name it is not subject to the early withdrawal penalty prior to age 59 1/2. The fact that you inherited this IRA exempts you and this new IRA from the early withdrawal penalty.

Here is a link to the IRS publication that discusses IRAs and specifically exempts inherited IRA accounts. The information is located under Exceptions in the penalty section. http://www.irs.gov/publications/p590/ch01.html#en_US_2012_publink1000230896

I cannot provide you with legal advise. I have provided you with information about the law related to your question. My answer, and any information that you find online, should not take the place of having a consultation with a lawyer in your area to advise you regarding your specific issues.

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Thank you,

John

Customer: replied 1 year ago.

Dear XXXXX,


On the IRS site, I saw information about withdrawals must last for 5 years,or penalty must be paid.


 


Your thoughts please.

Expert:  John Legal replied 1 year ago.
That is not the case if you roll to a new IRA. You can withdraw over time and without early withdrawal penalties. That is the reason I pointed you to the exceptions portion of the publication.

Please do not forget to rate me excellent so that I am paid to help you.
John Legal, Attorney
Category: Legal
Satisfied Customers: 4631
Experience: Over 15 years legal experience.
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