What are your thoughts? Housing going UP or DOWN?

[UCGal]

[quote=bearishgurl]Many of our “greatest-generation” and “depression-era” parents had their retirement funds tied up in 401K or 403(b)-type vehicles and died too young or without sufficient notice to move it all out of there while they were alive, well and eligible. Therefore, if their baby-boomer children inherit these funds and are under age 59-1/2, the funds can only be moved over to the heirs’ SSN WITHOUT WITHDRAWALS until they are age-eligible, unless they are willing to pay a 20% penalty for early withdrawal.
[/quote]
I apologize for the hijack but I need to correct this.

If the parent had started collecting on their 401k/IRA funds then the child does NOT have to cash out and there is NO 20% penalty. I know this from first hand experience. As mentioned previously, my parents have both passed and I inherited a small amount from them. The bulk was in IRA/401k money.

The adult child beneficiary has a “required minimum distribution” (RMD) that is based on the CHILD’s age and must withdraw that amount each year. They pay NORMAL income tax on it, no penalty. They CAN withdraw the entire amount – but that would mean they have to pay taxes on the entire amount (typically a higher rate than just adding the RMD to other sources of income) and they’d lose the tax deferred status of any money withdrawn.

The 20% penalty is NOT there for inherited tax deferred retirement funds. It is like an IRA that you can withdraw and pay normal income taxes – just doing it before you are 59.5.

If the beneficiary is the wife of the deceased the rules are a bit different. I only did the research on the adult child beneficiary case since that’s the one that applied to me.

Too many people cash out inherited IRAs without considering the tax advantage of keeping it tax deferred.

Google “inherited IRA” and you’ll find the details, calculators for determining the RMD each year, etc.

I hope this info helps someone avoid costly misunderstandings.
End hijack.

[jpinpb]

Some of the boomer parents have lost money in their investments. Seems many investment vehicles were heavily in real estate. I would not assume the boomers’ parents are liquid and free and clear.

An example. My g/f’s mom passed away. They had some medical bills they had to cover. The dad took care of things. The dad recently passed away leaving the old house in Chula Vista to the three children. One is taking a loan on the house and paying off the two other siblings. Hardly going to retire off this.

Many of the boomers have multiple children and they will have to divide any proceeds.

[jpinpb]

Some of the boomer parents have lost money in their investments. Seems many investment vehicles were heavily in real estate. I would not assume the boomers’ parents are liquid and free and clear.

An example. My g/f’s mom passed away. They had some medical bills they had to cover. The dad took care of things. The dad recently passed away leaving the old house in Chula Vista to the three children. One is taking a loan on the house and paying off the two other siblings. Hardly going to retire off this.

Many of the boomers have multiple children and they will have to divide any proceeds.

[jpinpb]

Some of the boomer parents have lost money in their investments. Seems many investment vehicles were heavily in real estate. I would not assume the boomers’ parents are liquid and free and clear.

An example. My g/f’s mom passed away. They had some medical bills they had to cover. The dad took care of things. The dad recently passed away leaving the old house in Chula Vista to the three children. One is taking a loan on the house and paying off the two other siblings. Hardly going to retire off this.

Many of the boomers have multiple children and they will have to divide any proceeds.

[jpinpb]

Some of the boomer parents have lost money in their investments. Seems many investment vehicles were heavily in real estate. I would not assume the boomers’ parents are liquid and free and clear.

An example. My g/f’s mom passed away. They had some medical bills they had to cover. The dad took care of things. The dad recently passed away leaving the old house in Chula Vista to the three children. One is taking a loan on the house and paying off the two other siblings. Hardly going to retire off this.

Many of the boomers have multiple children and they will have to divide any proceeds.

[jpinpb]

Some of the boomer parents have lost money in their investments. Seems many investment vehicles were heavily in real estate. I would not assume the boomers’ parents are liquid and free and clear.

An example. My g/f’s mom passed away. They had some medical bills they had to cover. The dad took care of things. The dad recently passed away leaving the old house in Chula Vista to the three children. One is taking a loan on the house and paying off the two other siblings. Hardly going to retire off this.

Many of the boomers have multiple children and they will have to divide any proceeds.

[bearishgurl]

[quote=UCGal][quote=bearishgurl]Many of our “greatest-generation” and “depression-era” parents had their retirement funds tied up in 401K or 403(b)-type vehicles and died too young or without sufficient notice to move it all out of there while they were alive, well and eligible. Therefore, if their baby-boomer children inherit these funds and are under age 59-1/2, the funds can only be moved over to the heirs’ SSN WITHOUT WITHDRAWALS until they are age-eligible, unless they are willing to pay a 20% penalty for early withdrawal.
[/quote]
I apologize for the hijack but I need to correct this.

If the parent had started collecting on their 401k/IRA funds then the child does NOT have to cash out and there is NO 20% penalty. I know this from first hand experience. As mentioned previously, my parents have both passed and I inherited a small amount from them. The bulk was in IRA/401k money.

The adult child beneficiary has a “required minimum distribution” (RMD) that is based on the CHILD’s age and must withdraw that amount each year. They pay NORMAL income tax on it, no penalty. They CAN withdraw the entire amount – but that would mean they have to pay taxes on the entire amount (typically a higher rate than just adding the RMD to other sources of income) and they’d lose the tax deferred status of any money withdrawn.

The 20% penalty is NOT there for inherited tax deferred retirement funds. It is like an IRA that you can withdraw and pay normal income taxes – just doing it before you are 59.5.

If the beneficiary is the wife of the deceased the rules are a bit different. I only did the research on the adult child beneficiary case since that’s the one that applied to me.

Too many people cash out inherited IRAs without considering the tax advantage of keeping it tax deferred.

Google “inherited IRA” and you’ll find the details, calculators for determining the RMD each year, etc.

I hope this info helps someone avoid costly misunderstandings.
End hijack.[/quote]

Sorry for any misunderstandings, UCGal. I’m not familiar with tax law and hire these things done.

One of my parents died PRIOR to being eligible to take out retirement monies penalty-free and I was strongly advised by my other parent’s administrator (who is a CPA) to leave inherited retirement monies intact until retirement which I have been doing. This parent was of eligible age and still working when they died and did not touch their retirement monies or any of their accumulated OASDI. I will however, take a small draw next year to do some long-needed home improvements. I currently endeavor to pay as little tax as possible or even no tax.

Thank you for the clarification. I will look at the link you provided.

[bearishgurl]

[quote=UCGal][quote=bearishgurl]Many of our “greatest-generation” and “depression-era” parents had their retirement funds tied up in 401K or 403(b)-type vehicles and died too young or without sufficient notice to move it all out of there while they were alive, well and eligible. Therefore, if their baby-boomer children inherit these funds and are under age 59-1/2, the funds can only be moved over to the heirs’ SSN WITHOUT WITHDRAWALS until they are age-eligible, unless they are willing to pay a 20% penalty for early withdrawal.
[/quote]
I apologize for the hijack but I need to correct this.

If the parent had started collecting on their 401k/IRA funds then the child does NOT have to cash out and there is NO 20% penalty. I know this from first hand experience. As mentioned previously, my parents have both passed and I inherited a small amount from them. The bulk was in IRA/401k money.

The adult child beneficiary has a “required minimum distribution” (RMD) that is based on the CHILD’s age and must withdraw that amount each year. They pay NORMAL income tax on it, no penalty. They CAN withdraw the entire amount – but that would mean they have to pay taxes on the entire amount (typically a higher rate than just adding the RMD to other sources of income) and they’d lose the tax deferred status of any money withdrawn.

The 20% penalty is NOT there for inherited tax deferred retirement funds. It is like an IRA that you can withdraw and pay normal income taxes – just doing it before you are 59.5.

If the beneficiary is the wife of the deceased the rules are a bit different. I only did the research on the adult child beneficiary case since that’s the one that applied to me.

Too many people cash out inherited IRAs without considering the tax advantage of keeping it tax deferred.

Google “inherited IRA” and you’ll find the details, calculators for determining the RMD each year, etc.

I hope this info helps someone avoid costly misunderstandings.
End hijack.[/quote]

Sorry for any misunderstandings, UCGal. I’m not familiar with tax law and hire these things done.

One of my parents died PRIOR to being eligible to take out retirement monies penalty-free and I was strongly advised by my other parent’s administrator (who is a CPA) to leave inherited retirement monies intact until retirement which I have been doing. This parent was of eligible age and still working when they died and did not touch their retirement monies or any of their accumulated OASDI. I will however, take a small draw next year to do some long-needed home improvements. I currently endeavor to pay as little tax as possible or even no tax.

Thank you for the clarification. I will look at the link you provided.

[bearishgurl]

[quote=UCGal][quote=bearishgurl]Many of our “greatest-generation” and “depression-era” parents had their retirement funds tied up in 401K or 403(b)-type vehicles and died too young or without sufficient notice to move it all out of there while they were alive, well and eligible. Therefore, if their baby-boomer children inherit these funds and are under age 59-1/2, the funds can only be moved over to the heirs’ SSN WITHOUT WITHDRAWALS until they are age-eligible, unless they are willing to pay a 20% penalty for early withdrawal.
[/quote]
I apologize for the hijack but I need to correct this.

If the parent had started collecting on their 401k/IRA funds then the child does NOT have to cash out and there is NO 20% penalty. I know this from first hand experience. As mentioned previously, my parents have both passed and I inherited a small amount from them. The bulk was in IRA/401k money.

The adult child beneficiary has a “required minimum distribution” (RMD) that is based on the CHILD’s age and must withdraw that amount each year. They pay NORMAL income tax on it, no penalty. They CAN withdraw the entire amount – but that would mean they have to pay taxes on the entire amount (typically a higher rate than just adding the RMD to other sources of income) and they’d lose the tax deferred status of any money withdrawn.

The 20% penalty is NOT there for inherited tax deferred retirement funds. It is like an IRA that you can withdraw and pay normal income taxes – just doing it before you are 59.5.

If the beneficiary is the wife of the deceased the rules are a bit different. I only did the research on the adult child beneficiary case since that’s the one that applied to me.

Too many people cash out inherited IRAs without considering the tax advantage of keeping it tax deferred.

Google “inherited IRA” and you’ll find the details, calculators for determining the RMD each year, etc.

I hope this info helps someone avoid costly misunderstandings.
End hijack.[/quote]

Sorry for any misunderstandings, UCGal. I’m not familiar with tax law and hire these things done.

One of my parents died PRIOR to being eligible to take out retirement monies penalty-free and I was strongly advised by my other parent’s administrator (who is a CPA) to leave inherited retirement monies intact until retirement which I have been doing. This parent was of eligible age and still working when they died and did not touch their retirement monies or any of their accumulated OASDI. I will however, take a small draw next year to do some long-needed home improvements. I currently endeavor to pay as little tax as possible or even no tax.

Thank you for the clarification. I will look at the link you provided.

[bearishgurl]

[quote=UCGal][quote=bearishgurl]Many of our “greatest-generation” and “depression-era” parents had their retirement funds tied up in 401K or 403(b)-type vehicles and died too young or without sufficient notice to move it all out of there while they were alive, well and eligible. Therefore, if their baby-boomer children inherit these funds and are under age 59-1/2, the funds can only be moved over to the heirs’ SSN WITHOUT WITHDRAWALS until they are age-eligible, unless they are willing to pay a 20% penalty for early withdrawal.
[/quote]
I apologize for the hijack but I need to correct this.

If the parent had started collecting on their 401k/IRA funds then the child does NOT have to cash out and there is NO 20% penalty. I know this from first hand experience. As mentioned previously, my parents have both passed and I inherited a small amount from them. The bulk was in IRA/401k money.

The adult child beneficiary has a “required minimum distribution” (RMD) that is based on the CHILD’s age and must withdraw that amount each year. They pay NORMAL income tax on it, no penalty. They CAN withdraw the entire amount – but that would mean they have to pay taxes on the entire amount (typically a higher rate than just adding the RMD to other sources of income) and they’d lose the tax deferred status of any money withdrawn.

The 20% penalty is NOT there for inherited tax deferred retirement funds. It is like an IRA that you can withdraw and pay normal income taxes – just doing it before you are 59.5.

If the beneficiary is the wife of the deceased the rules are a bit different. I only did the research on the adult child beneficiary case since that’s the one that applied to me.

Too many people cash out inherited IRAs without considering the tax advantage of keeping it tax deferred.

Google “inherited IRA” and you’ll find the details, calculators for determining the RMD each year, etc.

I hope this info helps someone avoid costly misunderstandings.
End hijack.[/quote]

Sorry for any misunderstandings, UCGal. I’m not familiar with tax law and hire these things done.

One of my parents died PRIOR to being eligible to take out retirement monies penalty-free and I was strongly advised by my other parent’s administrator (who is a CPA) to leave inherited retirement monies intact until retirement which I have been doing. This parent was of eligible age and still working when they died and did not touch their retirement monies or any of their accumulated OASDI. I will however, take a small draw next year to do some long-needed home improvements. I currently endeavor to pay as little tax as possible or even no tax.

Thank you for the clarification. I will look at the link you provided.

[bearishgurl]

[quote=UCGal][quote=bearishgurl]Many of our “greatest-generation” and “depression-era” parents had their retirement funds tied up in 401K or 403(b)-type vehicles and died too young or without sufficient notice to move it all out of there while they were alive, well and eligible. Therefore, if their baby-boomer children inherit these funds and are under age 59-1/2, the funds can only be moved over to the heirs’ SSN WITHOUT WITHDRAWALS until they are age-eligible, unless they are willing to pay a 20% penalty for early withdrawal.
[/quote]
I apologize for the hijack but I need to correct this.

If the parent had started collecting on their 401k/IRA funds then the child does NOT have to cash out and there is NO 20% penalty. I know this from first hand experience. As mentioned previously, my parents have both passed and I inherited a small amount from them. The bulk was in IRA/401k money.

The adult child beneficiary has a “required minimum distribution” (RMD) that is based on the CHILD’s age and must withdraw that amount each year. They pay NORMAL income tax on it, no penalty. They CAN withdraw the entire amount – but that would mean they have to pay taxes on the entire amount (typically a higher rate than just adding the RMD to other sources of income) and they’d lose the tax deferred status of any money withdrawn.

The 20% penalty is NOT there for inherited tax deferred retirement funds. It is like an IRA that you can withdraw and pay normal income taxes – just doing it before you are 59.5.

If the beneficiary is the wife of the deceased the rules are a bit different. I only did the research on the adult child beneficiary case since that’s the one that applied to me.

Too many people cash out inherited IRAs without considering the tax advantage of keeping it tax deferred.

Google “inherited IRA” and you’ll find the details, calculators for determining the RMD each year, etc.

I hope this info helps someone avoid costly misunderstandings.
End hijack.[/quote]

Sorry for any misunderstandings, UCGal. I’m not familiar with tax law and hire these things done.

One of my parents died PRIOR to being eligible to take out retirement monies penalty-free and I was strongly advised by my other parent’s administrator (who is a CPA) to leave inherited retirement monies intact until retirement which I have been doing. This parent was of eligible age and still working when they died and did not touch their retirement monies or any of their accumulated OASDI. I will however, take a small draw next year to do some long-needed home improvements. I currently endeavor to pay as little tax as possible or even no tax.

Thank you for the clarification. I will look at the link you provided.

[sdrealtor]

I’m not assuming all boomer parent’s are liquid and free and clear BUT some are. Some leave bills and some leave inheritances some of which are small and some are large. I know of some that left nothing but because of how I grew up I happen to know more that will leave plenty for children who are already very successful in their own rights. Its all over the board and I just want to make sure we look at things in balanced approach. Not everyone is leaving behind bills. I have a client right now whose father was a retired marine that liked to pick up beat up old houses and units around North Park. He was a tough as nails no nonsense guy that you would see at Home depot and think nothing of him. He just passed last year and left his two kids (in their 50’s) apartment complexes , land, houses, and 2 to 4 unit properties. We are working on selling some properties as he didnt have much other assets and owes the IRS about $1M in estate taxes. After that the kids will live off the rental income comfortably for the rest of their lives. Fr everyone of him there are a handful not like like him but thats not the point. The point is there are a good number of folks like him too.

[sdrealtor]

I’m not assuming all boomer parent’s are liquid and free and clear BUT some are. Some leave bills and some leave inheritances some of which are small and some are large. I know of some that left nothing but because of how I grew up I happen to know more that will leave plenty for children who are already very successful in their own rights. Its all over the board and I just want to make sure we look at things in balanced approach. Not everyone is leaving behind bills. I have a client right now whose father was a retired marine that liked to pick up beat up old houses and units around North Park. He was a tough as nails no nonsense guy that you would see at Home depot and think nothing of him. He just passed last year and left his two kids (in their 50’s) apartment complexes , land, houses, and 2 to 4 unit properties. We are working on selling some properties as he didnt have much other assets and owes the IRS about $1M in estate taxes. After that the kids will live off the rental income comfortably for the rest of their lives. Fr everyone of him there are a handful not like like him but thats not the point. The point is there are a good number of folks like him too.

[sdrealtor]

I’m not assuming all boomer parent’s are liquid and free and clear BUT some are. Some leave bills and some leave inheritances some of which are small and some are large. I know of some that left nothing but because of how I grew up I happen to know more that will leave plenty for children who are already very successful in their own rights. Its all over the board and I just want to make sure we look at things in balanced approach. Not everyone is leaving behind bills. I have a client right now whose father was a retired marine that liked to pick up beat up old houses and units around North Park. He was a tough as nails no nonsense guy that you would see at Home depot and think nothing of him. He just passed last year and left his two kids (in their 50’s) apartment complexes , land, houses, and 2 to 4 unit properties. We are working on selling some properties as he didnt have much other assets and owes the IRS about $1M in estate taxes. After that the kids will live off the rental income comfortably for the rest of their lives. Fr everyone of him there are a handful not like like him but thats not the point. The point is there are a good number of folks like him too.

[sdrealtor]

I’m not assuming all boomer parent’s are liquid and free and clear BUT some are. Some leave bills and some leave inheritances some of which are small and some are large. I know of some that left nothing but because of how I grew up I happen to know more that will leave plenty for children who are already very successful in their own rights. Its all over the board and I just want to make sure we look at things in balanced approach. Not everyone is leaving behind bills. I have a client right now whose father was a retired marine that liked to pick up beat up old houses and units around North Park. He was a tough as nails no nonsense guy that you would see at Home depot and think nothing of him. He just passed last year and left his two kids (in their 50’s) apartment complexes , land, houses, and 2 to 4 unit properties. We are working on selling some properties as he didnt have much other assets and owes the IRS about $1M in estate taxes. After that the kids will live off the rental income comfortably for the rest of their lives. Fr everyone of him there are a handful not like like him but thats not the point. The point is there are a good number of folks like him too.

[Author]

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