STATEN ISLAND, NY — The death of a parent is often the worst time in life. In addition to grieving a great loss, we often have to deal with many financial issues.
And those financial-related issues include inheritance. However, this journey is not always easy. Especially if your parents still have retirement accounts such as 401Ks or Individual Retirement Accounts (IRAs) and you’re not sure how or when you can withdraw the remaining funds in those accounts.
For this reason we caught up Dennis Sermanekis a Senior Financial Advisor and Managing Partner of the Wells Fargo Advisors Financial Network in Bloomfield and has been serving Staten Island clients since 2006.
Q. My parents passed away and I have an IRA and a 401K. What options do these accounts have?
Surmanek: “Both IRAs and employee-sponsored retirement accounts such as 401(k) have separate processes and options for accessing funds from the deceased owner (deceased) or plan participant. .
First, let’s talk about IRAs. An IRA is usually held with either a bank or a brokerage firm. If the deceased has his IRA statement, you can call the agency where it is held. They will need to verify your identity to confirm that you are the designated beneficiary. Once your identity is verified, you will be given the option to open an inherited IRA with that institution in your name if you wish to continue your relationship with them.
You can also open an inheritance IRA with another institution. You can then approve the transfer of assets to the inherited IRA. If you have an inherited IRA with another financial institution, you will need to complete and process a money transfer form at your chosen financial institution to transfer funds to your account.
If you inherit a 401(k), there is another process. You will need to establish an inherited IRA with your chosen institution, but you will need to contact your plan administrator to facilitate the rollover. It’s on a few pages.
The advantage of keeping funds in the inherited IRA is that tax-deferred funds from your parents’ IRAs or 401(k) remain tax-deferred in the inherited IRA, but what if you want to withdraw some or all of the funds? mosquito. now?
Both of the above options allow you to liquidate all or part of your assets if you need cash now. However, if the assets were held under a traditional IRA or 401(k) rather than a Roth IRA/401(k), the assets may be considered pre-tax money and therefore taxable on the amount withdrawn. There is a possibility. It would be wise to consult a tax advisor before making that choice. “
Q. Money left in my parents’ 401K or IRA can be used at retirement age, but can I withdraw it anytime after my parents die?
Surmanek: “You don’t have to be of retirement age to access money from an inherited IRA or 401(k). There are three categories of beneficiaries, each with different conditions as to when an inherited IRA must be emptied Understand the beneficiary categories and distribution rules Please contact a tax and/or financial professional if you wish to do so.”
If you have a financial question that needs an answer, please send it to porpora@siadvance.com Your questions will be answered by the right experts.
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