IRA Tax Penalties
 

My father passed away recently and left a small IRA ($36K) which was payable to me on death. I don't wish to leave it at the bank it is with and understand I'm looking at paying taxes on it.

A few notes:
While nobody wants to pay taxes, I'm not looking at ways to avoid them.
I'm only 45, I have a 401k that will survive the current economic climate and don't necessarily want to roll it into that, but would if it seemed right.
I do have some debts that whatever is left after taxes would surely cover. (which is where I'm leaning)
Even if leaving it in an IRA, CD, money market account, Christmas Club or Mason jar is the right thing to do, I won't do it with this bank.

Are any TFPers familiar enough with banking to know the best way to transfer if from where it is to my bank? I just don't want to take a cashier's check from the old bank to the new one if it screws me in the long run. And then again, I don't want this particular bank using even this small amount until I decide what to do with it.

If you are the beneficiary from your father you can't roll it over into your own IRA.:no: You can only do that if it comes from a spouse. I think that once you take it out of where it is, it immediately becomes taxable income to you, at your tax rate. You may be able to spread out the withdrawals over (I think) five years, which might reduce the taxes, but that still leaves the money in that bank. This is a complicated question, and it has been a while since I've looked at the rules. Be careful not to "cut off your nose to spite your face" just because you dislike that bank. You should probably talk to an accountant, or at least an IRA specialist.

Great website for all IRA questions is Ed Slott's IRA Forum
Ed Slott and Company IRA Discussion Forum • View forum - IRA Discussion Forum
lots of helpful people there.:)

Lindy

If your income is down this year due to the economy, it may be to your advantage to pay tax on this now while you're in a lower tax bracket, rather than waiting and paying a higher rate.

Thanks for the replies.

While the company I work for has been slowed a bit by the recession, we are doing well enough that Hell would have to break loose to hurt my wages (knock on wood).

I half thought about putting the money into IRAs under dad's name FBO my son's names, but then the money would again sit unused for over a half century.

I believe I have until some time next year to do anything, but that leaves it in Arvest's (AKA Wal-Mart Bank's) hands which I can't stomach.