Barron's Advisor Patti Brennan: How to Avoid Costly Mistakes With Inherited IRAs
Jan 28, 2025
Patti Brennan, CEO of Key Financial and a Barron's Hall of Fame advisor, delves into the complexities of inherited IRAs and recent IRS regulation changes. She shares insights on how nonspouse beneficiaries can avoid costly penalties and navigate distribution rules effectively. Patti highlights the significance of tailored strategies like spousal rollovers and Roth conversions to enhance tax efficiency. With her background as an ICU nurse, she emphasizes the power of clear communication in demystifying financial concepts for clients.
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IRA Distribution Rules
- Understand new IRA distribution rules for eligible (ED) and non-eligible (NED) beneficiaries.
- Categorize beneficiaries based on their relationship to the deceased and required beginning date (RBD).
Quirky Rules for Beneficiaries
- Be mindful of quirky rules for minors, who are EDs until age 21.
- For disabled/chronically ill beneficiaries, rolling over to an IRA avoids documentation for custodians.
The Young Widow's Tax Burden
- A young widow, unnecessarily paying taxes on an inherited IRA, was advised to do a spousal rollover.
- Retroactive minimum distributions fixed the issue, saving her significant taxes.