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Inherited IRA tax advantages
Posted on 11/5/25 at 11:41 am
Posted on 11/5/25 at 11:41 am
I have an inherited IRA where I qualify to be treated as an eligible designated beneficiary meaning I can either take RMDs annually over my life expectancy (50+ years) or just withdraw the full amount within 10 years in whatever increments I choose. It's only about $20k so not enough to attract a huge tax hit. But I don't really see any benefit in leaving the money in the inherited IRA if I just intend to invest it in a mutual fund and leave it alone.
My understanding is that I will have to pay the taxes when I withdraw and I'd expect my taxes to be higher in 10 years than they are today. It also doesn't seem like enough money to drag out the RMDs over 50+ years and wait for retirement.
Is the only advantage of leaving it in the inherited IRA the ability to trade without tax? So if I were to trade individual stocks or invest in dividend funds then maybe it has some small tax advantage vs just withdrawing it all now and investing it in my traditional taxable brokerage?
My understanding is that I will have to pay the taxes when I withdraw and I'd expect my taxes to be higher in 10 years than they are today. It also doesn't seem like enough money to drag out the RMDs over 50+ years and wait for retirement.
Is the only advantage of leaving it in the inherited IRA the ability to trade without tax? So if I were to trade individual stocks or invest in dividend funds then maybe it has some small tax advantage vs just withdrawing it all now and investing it in my traditional taxable brokerage?
1
Posted on 11/5/25 at 11:42 am to Yeti_Chaser
It's $20k, dont overthink it, just get the money out now
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