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As long as she is alive, she is required to take at least a minimum distribution (RMD) each year.
There are no penalties for early withdrawal since she is old enough, but there are penalties of 50% of the RMD amount if she does not take money out
Of course, at any time, she can take the whole amount out without any penalty, but ordinary tax is due
If she took a lump sum out, she could gift each person in the family up to 13K without filing a gift tax return.
She is very ill
That means you and your wife could get $26K in one year without gift tax return
Of course, if her estate is less than $5MM, she could just use her exemption and gift any amount
so she is going to withdraw the full 71,000
If she empties her retirement account before she passes away, then you need not worry about sipping money with requried distributions after she passes. You get tax free cash
But she needs to save a bit of that $71K to pay the tax bill
we are paying her bill
Is she getting Social Security too?
remember that 85% of the SS benefit is taxable too
she is under hospice care with us
OK sorry to hear
Does she have any other assets like a house?
so if we have Mirrell Lynch withhold 10%
10% will be light.
will she owe additional tax?
How much is her SS benefit?
so far this year?
Of course, the longer she hangs on, the more checks she gets
so I guess for this year her income will be in the 75,000 range
OK not much
I would think around 15% would cover the tax then
so she will owe tax on that if she withdraws
Add a few more percent for Mr. Christie's share
and will my wife be responsible for that after she is gone?
if my mother in law owes taxes at the end of the year?
The trustee of her estate will need to file final federal and state returns and pay the tax
No matter when during the year she passes, she will be considered for tax purposes to live the entire year
OK, thank you for your help
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