We inherited four IRA accounts (totalling approx $600,000) in April 2025 due to an elderly parent's death. By law these four accounts must be completely depleted within ten years. What is the best strategy for making RMDS over the next ten years with the least tax liability to us? Our 2024 AGI was about $48,000.
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I am so sorry for your loss. Dealing with the necessary financial details after the passing of your parent is certainly a challenge, but I can clarify your question regarding the Required Minimum Distributions (RMDs).
As you inherited the IRA's in 2025, all distributions must be made by the end of the 10th year after your parent's death (exception if you are considered an "eligible designated beneficiaries", I presume that you do not meet those criteria to be considered an eligible designated beneficiary).
If your parent had begun RMDs before death, then you as the designated beneficiary must continue RMDs each year during the 10-year period. Keep in mind that you must take the calculated RMD amount in 2025 if your parent did not take it prior to passing away.
As to what is the best stategy for taking the RMD's over the next 10 years, the answer really depends on your specific situation. Do you expect your income to significantly increase or decrease over the next 10 years? Do you have dependents currently that may no longer be your dependents throughout that entire time? Are there tax credits that you may be eligible for at lower income levels that you may phase out of if your income was higher (such as Education Credits)? As there are many details that need to be taken into account to address that question, I would recommend that you seek out a local tax professional who can review your specific situation and provide guidance that best suits your situation.
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