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Jan 23 2012 12:00AM

Question


My mother died leaving her Individual Retirement Account (IRA) annuity to myself and my brother. I know what amount I must take each year. If I choose to take more each year from the IRA, would I be subject to the 10 percent penalty from the IRS?

Answer

“You would not be subject to the 10 percent penalty if you took more than the required payments,” said FPA member Josh Donley, CFP®, CLU®, CFS. “If you and your brother were beneficiaries, you may want to discuss getting the annuity split into two separate Inherited IRAs. You are going to have to re-title it anyway to affect the stretch IRA provisions. This would allow the payments to be calculated on each of your ages independently instead of on the oldest beneficiary. It would also allow you to make independent decisions on your respective inheritance.”

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