advisor for beneficiary accounts
May 6, 2008 9:58 AM   Subscribe

I'd like to cash out some beneficiary investment accounts. I'd like to know in advance what the taxes and penalties (if any) would be. In other words, what would be the cash remaining from this.

I've been asking my tax prep person for help and he's been referring me to a CPA and a pay for play investment counselor. Neither of those conversations gave me what I needed. I just need someone who can help me understand the net result of cashing in a beneficiary 401K and IRA. I have an account with Charles Schwab. Perhaps they would be the best people to ask? It would be nice to know all the aspects of doing this before making a decision.
Ultimately, having a financial advisor would be great. Where do I find this person who can start with the question above?
posted by D-ten to Work & Money (2 answers total)
How old are you? If you're over 59.5, there's no penalty for withdrawals. For IRAs, if you're under 59.5, and you're withdrawing the money for certain exceptions, like medical bills or buying your first home, there's no penalty.

You will pay income tax on withdrawals from traditional IRAs and 401(k)s, not on withdrawals from Roth IRAs or Roth 401(k)s.

For more details: Publication 590
posted by Dec One at 10:06 AM on May 6, 2008

This kind of thing can be complicated and may be further complicated by when you inherited the IRA and your relationship to the decedent. You should probably call Schwab; they deal with this all the time. If you're already taking RMDs I don't believe there's a penalty but I don't know whether there is one if you aren't taking RMDs.
posted by phoenixy at 10:40 AM on May 6, 2008 [1 favorite]

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