QUESTION DETAIL
Related User
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If I inherit $250,000 in a 401k, can I roll that into my IRA and avoid paying taxes until I make regular withdrawals from my IRA?
ANSWER
Expert Eugene Jaspan's Answer:
Inheriting money from an IRA or 401(k) works differently. You need to roll over the money from the 401(k) which you inherited into a beneficiary IRA, independent of the IRA that you already have. You cannot wait until retirement age to start making withdrawals from this IRA. You can either take distributions of equal amounts over a period of 5 years to liquidate it or you can take distributions of an equal amount over the remaining years you have to live based on your life expectancy. The custodian of this IRA will help you calculate this amount. Obviously if you are young, this is the better approach to take, as the distributions are taxed as ordinary income. The answer to your question is No. You cannot wait until retirement age (as you can with your regular IRA) to start taking distributions. You must start taking them in the year you inherit the money. The only question is which method you use to withdraw the funds.
