Don’t Get Taxed on Your Inheritance
Did you inherit an IRA? Make sure to watch out for the inherited IRA rules. These are very important rules to observe if you want to get the maximum possible amount of value out of your inheritance. Failure to abide by the rules will result in penalties. These penalties mostly come in the form of taxes and very often in the form of income tax. This happens because some people fail to observe the rules and just take the money out of the inherited IRA. You know what the IRS sees when you do this? Additional personal income. And personal income is taxable income. If you don’t want to pay taxes on your inheritance, make sure to read the rules. For example is it very important – when you want to do an IRA rollover into your own account – to make a direct transfer from custodian to custodian. If you happen to get a check written to your name in the process, this is counted as income. So you are taxed for the money because you broke a rule.
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