Wednesday, May 16, 2012
Effective tax planning requires forethought
A: If you are past age 70 1/2 and die before taking the current year's withdrawal, your IRA beneficiary must take a distribution by the end of that year. The distribution is based on your life expectancy and should be reported as ordinary income on your heir's own tax return. Most custodians require that the beneficiary set up an inherited IRA account and move the assets into it before taking the current year's withdrawal.
Q&A session published in the May 10, 2012 issue of Medical Economics magazine. Questions answered by Dan Danford, CFP(R) and Principal/Chief Executive Officer of Family Investment Center, and Medical Economics editorial consultant David Schiller, JD, of Schiller Law Associates in Norristown, Pennsylvania.