I will be inheriting an IRA from my gma who passed. I am wondering f I take a lump sum how much I could expect to pay in taxes and if there is a way to limit?

[Opus 17 · Accepted solution]

Sorry, you owe the tax.  The only way to limit the tax is to avoid taking so much that you are pushed into a higher tax bracket.

For example, if you are single with no dependents, income up to about $62,000 is taxed at 12%.  Between $62,000 and $115,000, you will pay 22%.  So if your ordinary income is $42,000, you can withdraw about $20,000 and stay in the 12% bracket.  If you withdraw more, the extra will be taxed at 22%. 

There are also 3 other rules you must follow.

1. If the previous owner was older than their RMD beginning date (required minimum distribution), and they did not withdraw their RMD for 2024 before they died, you must withdraw at least that much and pay tax on it.  Their RMD is based on their age in 2024.

2. You must withdraw at least a minimum amount each year starting in 2025 (your own RMD) based on your age.  You can withdraw more, of course, but you must withdraw at least the minimum amount for your age and the rules for inherited IRAs.

3. You must withdraw all the money and close the account by the end of the 10th year after the previous owner's death.

[fanfare]

When you are subject to the 10-year liquidation rule for newly inherited IRAs,
to spread the tax impact most evenly over the ten years, and regardless of the Year-End Value,
your divisor should be :10,9,8 . . . 2, 1
OR,    11 - N where N is the number of the distribution year. (Beneficiary RMDs start in the year after the year of death)

If the owner died in 2020, the beneficiary would have to fully distribute the plan by December 31, 2030. which is the tenth distribution year.
the portion to distribute is 1 / 1 or 100%.

In the eighth year you would take out one third of the IRA, there being three years to go.
If you are a young beneficiary, or even not so young, this rule would generate much larger distributions than the RMD based on Pub590B formulas.

At a very high age, the Pub590B formula will overtake this calculation and require a larger RMD in the beginning.

OTHERWISE, if the owner had not reached age 73,
Take any amounts you wish at any time, that is your choice,
OR
take it all in a lump sum at the end of ten years.

@ashes242