tIRA beneficiary

[rayt168]

If I am a beneficiary of my Mom's tIRA, once she passes, based off of my reading, the account value at the time of her passing is considered income to me, correct?  Does anyone know of a way to stagger the amounts over a specific time period?  Note that I am aware of a living trust and it appears that I am swapping one headache for another headache.  Thank you in advance.

[secondcor521]

If I am a beneficiary of my Mom's tIRA, once she passes, based off of my reading, the account value at the time of her passing is considered income to me, correct?  Does anyone know of a way to stagger the amounts over a specific time period?  Note that I am aware of a living trust and it appears that I am swapping one headache for another headache.  Thank you in advance.

No, you are incorrect.

Once she passes, you'll be required to do RMD's on the traditional IRA, and you can do that based on your life expectancy when you inherit it.  If you're middle aged when she dies, your RMD will only be 2% to 5% of the total value of the IRA each year.  That annual RMD amount will be taxable income to you.

So say your Mom dies and leaves you a $1M traditional IRA.  Your RMD may be 3% of that, or $30,000.  That $30,000 will be taxable income to you that year.

The RMD adjusts each year as you get older and the value of the account fluctuates.

[rayt168]

If I am a beneficiary of my Mom's tIRA, once she passes, based off of my reading, the account value at the time of her passing is considered income to me, correct?  Does anyone know of a way to stagger the amounts over a specific time period?  Note that I am aware of a living trust and it appears that I am swapping one headache for another headache.  Thank you in advance.

No, you are incorrect.

Once she passes, you'll be required to do RMD's on the traditional IRA, and you can do that based on your life expectancy when you inherit it.  If you're middle aged when she dies, your RMD will only be 2% to 5% of the total value of the IRA each year.  That annual RMD amount will be taxable income to you.

So say your Mom dies and leaves you a $1M traditional IRA.  Your RMD may be 3% of that, or $30,000.  That $30,000 will be taxable income to you that year.

The RMD adjusts each year as you get older and the value of the account fluctuates.

Thank you for the clarification.  I appreciate the input.  From a tax perspective, it looks like it won't be as bad as I originally feared.