10% penality on inherited ira dollars
QUESTION- wife is a beneficiary of her deceased husbands IRA account-the IRA account has been registered as IRA- BDA SPS for the wifes name- wife is 57 and her deceased husband would have been 591/2 this coming Oct 2008- she was ‘told’ that she could start extracting dollars from this inheriteed IRA without payinig the 10% penality since her husband would have been 59 1/2 in Oct-IS this comment valid based on the above information???
I realize she can do section72t- she has $$180,000 in this IRA- what are the72t parameters?? She is 57. Your comments??? thank you.
Permalink Submitted by Denise Appleby on Thu, 2008-09-25 15:12
From what I recall, some firms use BDA for “beneficiary designation account”, which is an inherited/beneficiary IRA. Distributions from these accounts are not subject to the early distribution penalty. 72(t) distribution is not required (and should not be taken from) these IRAs, as distributions from them are already penalty free.
When she reaches age 59 ½, she can move the balance to her ‘own’ IRA, which would allow her beneficiaries to use their own life expectancies (instead of hers) when calculating their distributions (when they inherit the IRA).