Q: My brother passed away in 2005. I just learned that he left me an ira worth about $8,500. Distribution and tax law-
I learned I need to be taking distributions but, I don't know how much. I'd like to avoid the tax consequences. I live in Colorado but the ira is held in Alabama.
A:
Mandatory minimum distributions (MMD) are figured based on a formula. The amount to withdraw should be provided by the fund manager of the IRA (this is part of the service that your investment fees are paying for). Note MMD rules (which only apply to traditional tax deferred IRAs) are tied to the age of the deceased. This is usually 70.5 for most people. There is no way to wholly avoid taxation at graduated rates (not capital gains), but there are ways to reduce the tax burden.
Contact the fund manager for details. You may want to hire a tax professional to review the possible transactions.
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