IRA
What advantages does an inherited IRA have versus a Traditional IRA as spouse beneficiary I have choice I am 88 and would prefer stretching out payments
Other info my wife was 79 and died in 2020 a NY state teacher resident of NYC as
am I. Total amount $600,000.
Permalink Submitted by Alan - IRA critic on Wed, 2021-05-05 20:47
If you can locate your prior post, I compared the inherited 403b RMD with the RMD after doing the spousal rollover to your own traditional IRA. The owned IRA RMD was much lower. If you do a direct rollover to an inherited IRA rather than your own IRA, your RMDs will be the same as if you left it with TRS. That RMD is approximately 61,224 from an inherited IRA or inherited TRS compared with 47,244 if you rolled it over to your own IRA.
In another prior response, the NYS and NYC tax exemption was considered. Since the inherited IRA would involve doing some math to determine which portion of the RMD would lose the total exemption and become subject to the 20k NYS general exemption, and keeping it with TRS would avoid that hassle, you can eliminate the inherited IRA as an option. But the owned IRA would have a much lower RMD and therefore lower federal tax, that doing this math would be worthwhile. THe owned IRA would therefore produce the lower annual RMD and the lower tax bill.
You might schedule an appointment after tax season ends in 2 weeks with a NYS tax accountant to review these conclusions and the amount of paperwork needed to determine the state exclusion if you go with the IRA rollover. It may not be that hard, particularly if you do not do your own taxes.
Note that the above RMD estimates are with the current RMD tables. These tables have been changed starting next year to new tables that will reduce RMDs for all options by around 6%.