BiggerPockets Money Podcast

503: How to Keep MORE of Your Inheritance From the IRS (Avoid These Tax Mistakes!)

21 snips
Feb 16, 2024
Guest
Sean Mullaney
Sean Mullaney, a tax professional, shares strategies for managing inherited investment accounts to avoid hefty tax bills. He discusses the four buckets of assets you can inherit and explains the step-up in basis exemption to dodge capital gains tax. He also covers the ten-year rule, early withdrawal penalties, and reducing tax obligations through Roth accounts.
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INSIGHT

Inherited Retirement Account Tax Implications

  • Inherited IRAs, 401ks, and 403bs can become tax time bombs if not managed properly.
  • This is especially relevant for those inheriting from less affluent individuals.
ADVICE

Managing Inherited IRA Withdrawals

  • Understand the 10-year rule for inherited IRAs: withdraw the full amount within 10 years.
  • Strategically plan withdrawals to minimize your tax burden over those 10 years.
ADVICE

Four Inheritance Buckets

  • Inheritances come in four forms: taxable assets, HSAs, Roth accounts, and tax-deferred accounts.
  • Taxable assets get a step-up in basis, making them tax-efficient for heirs.
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