Anyone know anything about inheritance IRA's? I need the skinny!

[dirty ethel rackham]

I am in a situation where an inheritance IRA has been created for me from my mom's IRA. However, I am getting terrible customer service from the financial guy who is in charge of this and want to know my options.

 

I understand that I get distributions from this account based upon my life expectancy. However, I may want to use this money to help pay tuition for my kid's college education. I take it that I have to pay taxes on any dispersements (or withdrawals.) Is that true?

 

What if I get really fed up with the people who are running it? Can I roll it over to something else? How would I do that?

[EmilyK]

You do pay tax on the distributions.

 

You can move to another financial institution. Figure out where you want to go and the new institution will help you move it.

[LizzyBee]

There were some changes a couple of years ago regarding inherited IRAs. I'm going on memory here, but I think it's imperative that if you move the account, it's titled correctly as an inherited IRA. Otherwise, the entire rollover becomes taxable. I would consult a CPA for advice since brokers and bankers often don't know all the tax ramifications of the transactions they manage. Not all CPAs are retirement plan specialists, so ask around to find someone who is competent in that arena.

[LaJuana]

...about how you transfer an inherited IRA. If it is not done exactly right, you can find yourself owing taxes on the entire amount rather than being able to take distributions over your own life expectancy.

[EmilyK]

Right, when you transfer it, it needs to be a transfer from one IRA custodian to another custodian, to another inherited IRA. You'd set up your new inherited IRA and then do a plan-to-plan transfer.