Tda inherited

Hello Monument53,

Thank you for participating in this Ask the Experts event. As to your question, that is a complex issue that makes it difficult to answer without some dialogue and multi-year planning.

First, I will assume you inherited it after 12/31/19 for which you typically must now cash it out within 10 years of the original owner's death. However, some heirs are exempted (those whose age is within a decade of the deceased's, disabled or chronically ill individuals, or minor children). Doubtful you are a minor-child, but maybe you can take advantage of any of the other exemptions?

If not, there's no particular timeframe for which you must take the withdrawals. So, you can take them annually or all at once, but to minimize the tax consequences I would recommend spreading them out, taking more in years where your other income is lower. If you are into charitable giving, you may also be able to contribute to a qualified charitable organization through a direct transfer to enjoy the charitable contribution deduction without experiencing the tax consequences of withdrawing that amount.

I hope that helps.