I Inherited a $550k IRA From My Dad. What's the Best Way to Withdraw in the 32% Tax Bracket?

Core Insights - Inheriting a tax-deferred retirement account, such as an IRA or 401(k), results in income taxes on withdrawals based on the beneficiary's marginal tax rate, which can significantly reduce the value of the inheritance [1][2] Summary by Sections IRA Inheritance Rules - Specific IRS rules dictate how inherited pre-tax accounts must be managed, varying by the beneficiary's relationship to the deceased [3] - Non-spouse beneficiaries must empty the inherited account within 10 years if the original owner died after January 1, 2020 [4] Exceptions to the 10-Year Rule - Certain heirs, classified as "eligible designated beneficiaries," have different rules, including minor children, disabled individuals, and those not more than 10 years younger than the deceased [7] - Non-spousal heirs, like adult children, must adhere to the 10-year rule or a 5-year rule if the owner died before 2020, requiring all assets to be withdrawn by December 31 of the 10th anniversary of the owner's death [4] Required Minimum Distributions (RMDs) - If the original owner had begun taking RMDs, beneficiaries must also take minimum distributions while holding the IRA, calculated using the longer of either the beneficiary's or the original owner's life expectancy [5] Managing Taxes on Inherited IRAs - Understanding withdrawal options is crucial for managing taxes on inherited IRAs, especially for designated beneficiaries who are not spouses or eligible designated beneficiaries [6][8]