Author Topic: Small inherited IRA - just want to cash out  (Read 1159 times)

geekette

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Small inherited IRA - just want to cash out
« on: January 23, 2015, 02:21:58 PM »
My DH inherited a $10k IRA from his dad last year.  At the time, instead of cashing out, he elected to keep it where it was (local small town bank) and turn it into an beneficiary IRA, taking the RMD based on his lifetime starting in December 2015.

It's in a money market account, earning a pittance. 

We're retired and we need a certain amount of income to make sure we don't fall into Medicaid territory.  Can we, at this point almost a year after his Dad's death, after it's been turned into a beneficiary IRA, cash out the account and take that as income for 2015 (without penalty)?  Too late?  I think there was a 5 year option as well.

Otherwise I guess we'll sell other stuff to create income and fill out the 9 pages of forms to move this IRA to Vanguard, stuff it in their S&P500 fund and see what happens.

seattlecyclone

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Re: Small inherited IRA - just want to cash out
« Reply #1 on: January 23, 2015, 02:57:04 PM »
I'm pretty sure the RMDs are just the minimum you must take out each year. Nothing's stopping you from taking out more than that, or even the whole amount.

looking for FI

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Re: Small inherited IRA - just want to cash out
« Reply #2 on: January 23, 2015, 04:19:37 PM »
There is no penilty from the IRS to cash out a bene IRA. It will be taxed as ordinary income.