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Ok shortish version is my dad passed away in 2018, he was 62 and still working.

I fought with his 401k provider HCA almost instantly as the eldest son/executor. They moved his balance to another HCA account in my name and then wouldn't let me log in without a 3-4 ID (a user name). I figured it was in an account and I didn't need it at the moment so I lieu of a headache I left it. Today I found out that I have 5 years from death to either withdraw a lump payout of ~$20k or roll to Inherited IRA. Either way Death Taxes will be taken.

As a low income family is there a reason not to do the rollover? A lump pay will kick us into a high tax bracket possibly (maybe I'm wrong already assuming that, it's a small amount but more than I've seen in one check before). IRA would pay some minimum amount regularly which I would just put in my personal Roth and being less I think taxes would stay more or less the same.

Anyone on here have personal experience or insight into this obscure stupid part of adulting? I'm not sure and just wanna be sure I understand what I'm dealing with in general. Thanks!
 
I would roll it over into a new IRA. I believe it will be treated as any other IRA where you pay taxes when you take money out in retirement.

Taxes are progressive so you are not going to pay a lot extra if you are already low income, should you decide to take the lump sum.
 
I would roll it over into a new IRA. I believe it will be treated as any other IRA where you pay taxes when you take money out in retirement.

Taxes are progressive so you are not going to pay a lot extra if you are already low income, should you decide to take the lump sum.
That's what I had tried to do originally, roll over to my existing 401k or Roth but was told since it was HIS retirement it can't be rolled anywhere. Only options are to Cash Out or Inherited IRA.

That being said I don't see a benefit to taking the lump sum now. Leaning heavily toward the slow pay option.

Thanks a million for replying and being so polite (off topic or not it's still a firearm forum). I've been treated a world better here than when I ask places like Reddit for help. Hope to pay it forward soon!
 
It seems that thanks to the SECURE Act; you have to empty the Inherited IRA within 10 years of the deceased's passing? So either way you have either 1 lump sum with a big tax penalty, or 6 years of payouts with smaller tax penalties depending on how much it adds to your current income? 🤷‍♂️
Source; https://www.unionbank.com/personal/...ira-rules-beneficiary-options-and-withdrawals
That's what I was understanding too, more or less. So dumb that it's become this limbo account that's not mine or his, and more frustrating that none of the reps at HCA have never once mentioned this to me in the years I've called.

Much appreciation and gratitude for your info!
 
I don't think you are talking about death taxes (estate and/or inheritance taxes). Those are usually due within a period of months after the person dies. Oregon does not collect taxes unless the value of the estate exceeds $1 million, and the feds have a threshold of $12 million.

Sounds more like what you may be facing is paying income tax on funds that were deposited in a tax sheltered account. How do you plan to use the money? If you plan to use it to pay medical bills, then do the rollover. If you want the cash, take the payout and pay the tax. It will not increase the marginal rate you pay on other income, AFAIK.

If in doubt, consult a professional tax advisor. It may cost you a few hundred bucks but the money's all gravy to you anyway, so pay for good advice and avoid a possibly costly mistake.
 
I don't think you are talking about death taxes (estate and/or inheritance taxes). Those are usually due within a period of months after the person dies. Oregon does not collect taxes unless the value of the estate exceeds $1 million, and the feds have a threshold of $12 million.

Sounds more like what you may be facing is paying income tax on funds that were deposited in a tax sheltered account. How do you plan to use the money? If you plan to use it to pay medical bills, then do the rollover. If you want the cash, take the payout and pay the tax. It will not increase the marginal rate you pay on other income, AFAIK.

If in doubt, consult a professional tax advisor. It may cost you a few hundred bucks but the money's all gravy to you anyway, so pay for good advice and avoid a possibly costly mistake.
Thing is depending on how its set up, its capital gains that may be taxable, and its "income" that also may be taxable... but again, it dependent on how the Inherited IRA distribution/payout is set up.
 
Thing is depending on how its set up, its capital gains that may be taxable, and its "income" that also may be taxable... but again, it dependent on how the Inherited IRA distribution/payout is set up.
I don't know about that. Capital gains within a tax sheltered account are tax free, in my experience. When funds are withdrawn from the account, they are usually taxed as ordinary income. But this is an HCA, according to OP, so if he rolls it over and uses it for medical expenses, there should be no tax.

Anyway, it doesn't really matter. If youse want the money, youse pay whatever taxes are due. It still doesn't "bump him into a higher tax bracket." He would only pay a higher marginal rate (potentially) on the extraordinary income. And I think that was the gist of his question.

But one should never seek financial advice on a gun forum. :D Pay a professional.
 
I was lucky and received mine before the ten year total withdraw rule took effect. I'm still forced to withdraw around $37k per year to avoid penalties. The feds want their tax dollars as soon as they can. I left it in an inherited IRA, but chose to use a more local person, same one who handles my other retirement accounts. Sorry for your Dads passing.
 

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