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Using "special withdrawals" in retirement accounts for inherited IRA RMDs

Submitted by dkamerow@yahoo.com on 2 April 2011 - 6:08pm

I have an inherited IRA that I must take a required minimum distribution from every year, whereas my other IRAs don't require this til age 70.5, of course.

Can I model this by combining the inherited IRA funds with my other IRA funds, estimating the RMD from the inherited IRA each year til I'm 70, and using the "special withdrawal" category in the retirement section to force a withdrawal of that amount every year until I'm 70?

Then, once I'm 70 it will automatically consider the inherited IRA funds when calculating my overall RMD each year, right?

Thanks.

Doug Kamerow

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Submitted by esplanner on 3 April 2011 - 12:26am.
1

That sounds about right. Larry may have some additional things to say but off the top of my head I can't see any problem with your approach.

Best,

Dick Munroe

Submitted by esplanner on 3 April 2011 - 7:04pm.
2

Having said that, you'll need to make sure you have a special receipt (taxable?) to account for the deposit to your IRA. The reason the make the special receipt taxable is because your IRA deposit provides you with a tax deduction and this would keep the taxes more or less correct.

best,

Dick Munroe

Submitted by dkamerow@yahoo.com on 5 April 2011 - 11:31am.
3

To be clear: if I force a "special withdrawal" under the retirement section from a traditional (tax deductable) IRA, as I asked at the top, doesn't the program do that and then automatically treat the withdrawal as taxable income? Or do I need to create, as you suggest in your second note above, a separate special taxable receipt that year as well as the special withdrawal from the IRA?

Thanks.

Doug Kamerow

Submitted by esplanner on 8 April 2011 - 8:53am.
4

Yes, it does treat the withdrawal as taxable, but if you inherit the IRA in the future and plan for the withdrawals in the future, then you need the special receipt to account for the contribution that is the inherited IRA.

I didn't know if you already have the IRA or will have the IRA.

Best,

Dick Munroe

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