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My brother passed away last July at 39. i am the beneficiary…

My brother passed away...

My brother passed away last July at 39. i am the beneficiary of an IRA just under $8,000. I’m wondering if is it too small to worry about larger planning? should i cash out and run or is there a better option for such a small amount. I am 39 also

Accountant's Assistant: The Accountant will know how to help. Is there anything else the Accountant should be aware of?

I have 3 kids. a wife. live in mass and salary is $125k

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3/22/2018
TaxRobin
TaxRobin, Senior Advisor
Category: Finance
Satisfied Customers: 18,353
Experience: 15 years of experience in financial advising with emphasis on tax issues.
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Hello, I'm Robin. Welcome to JustAnswer. I'm reviewing your question now and typing up my reply. I'll post that in just a few moments.

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Because you inherited form a non spouse (your brother) you cannot add to this IRA. You cannot make contributions and you will either be allowed to take it all out now or have it moved to a beneficiary IRA. Then you have 5 years to take it out.

Any amount you receive form teh IRA will be taxable to you.

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Customer reply replied 4 months ago
Is it added to my taxable income
or is extra taxable because it’s an IRA? for example would it be my income is $133,000 this year and I pay taxes or will
I have to dish out up to 40% at once to IRS?

It just gets added to your other income when you take money out. You can also request that they withhold tax for you when you take the money out.

Please let me know if you need more information.
If not then please scroll up to see the STARS to rate so I am credited.

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Customer reply replied 4 months ago
ok thanks. since they create the beneficiary account for me i’m wondering i get the under 59.5 penalty for withdrawing it all. separately, for something so small should i take 5 years to withdraw on the stretch

You will receive a pass for that 10% penalty. They will show a Code 4 for the Death of your brother on the 1099R

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That is up to you but if you could take now you could at the very least buy a CD to let it earn some money while you look around.

Please let me know if you need more information.
If not then please scroll up to see the STARS to rate so I am credited.

TaxRobin
TaxRobin, Senior Advisor
Category: Finance
Satisfied Customers: 18,353
Experience: 15 years of experience in financial advising with emphasis on tax issues.
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