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 > Link for an online calculator substantial equal periodic pay

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TenOC

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Posted: 03/20/21 11:14am Link  |  Quote  |  Print  |  Notify Moderator

Because inherited IRAs (due to the SECURE Act) must be withdrawn in 10 years, can someone point me to a link for an online calculator to calculate substantial equal periodic payments for the next 10 years from an inherited IRA with a reasonable (say 8% per year) return on the investment

Because of the 8% return on investments, it is not as simple as divided the initial amount by 10.


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rk911

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Posted: 03/20/21 11:44am Link  |  Quote  |  Print  |  Notify Moderator

i'm not sure the ROI in important in the calculation. I believe the RMD over 10-years would be 1/10th, 2/10ths, 3/10ths and so on until you'd receive 100% in year 10.


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TenOC

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Posted: 03/20/21 12:09pm Link  |  Quote  |  Print  |  Notify Moderator

rk911 wrote:

i'm not sure the ROI in important in the calculation. I believe the RMD over 10-years would be 1/10th, 2/10ths, 3/10ths and so on until you'd receive 100% in year 10.


But this will not be substantial equal payments if you apply these fraction to last years balance. For each $100,000 you get this results. If my math is correct.

$10,000.00
$19,600.00
$25,872.00
$26,906.88
$22,870.85
$15,918.11
$8,914.14
$3,871.28
$1,219.45

rk911

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Posted: 03/20/21 12:57pm Link  |  Quote  |  Print  |  Notify Moderator

TenOC wrote:

rk911 wrote:

i'm not sure the ROI in important in the calculation. I believe the RMD over 10-years would be 1/10th, 2/10ths, 3/10ths and so on until you'd receive 100% in year 10.


But this will not be substantial equal payments if you apply these fraction to last years balance. For each $100,000 you get this results. If my math is correct.

$10,000.00
$19,600.00
$25,872.00
$26,906.88
$22,870.85
$15,918.11
$8,914.14
$3,871.28
$1,219.45


1 $100,000.00 $108,000.00 $10,800.00 $97,200.00
2 $97,200.00 $104,976.00 $20,995.20 $83,980.80
3 $83,980.80 $90,699.26 $18,139.85 $72,559.41
4 $72,559.41 $78,364.16 $23,509.25 $54,854.91
5 $54,854.91 $59,243.31 $23,697.32 $35,545.98
6 $35,545.98 $38,389.66 $19,194.83 $19,194.83
7 $19,194.83 $20,730.42 $12,438.25 $8,292.17
8 $8,292.17 $8,955.54 $6,268.88 $2,686.66
9 $2,686.66 $2,901.60 $2,321.28 $580.32
10 $580.32 $626.74 $626.74 $0.00

is the 8% guaranteed and rock solid or is it variable? even if it is guaranteed the amount of interest it generates will vary with the principal. you might want to call the brokerage where the investment is held and have a chat with them. You might...likely will...get a better answer but I'll buy dinner if they can come up with a plan where each year's withdrawal is the same as the year before and the following years. alternatively you could simply withdraw $10k of the principal for the first 9-years and take the last $10k plus the accrued interest in year 10 but I'm not sure if that would be allowed as i think the withdrawals must follow the rules for required minimum distributions.

TenOC

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Posted: 03/20/21 01:32pm Link  |  Quote  |  Print  |  Notify Moderator

rk911 wrote:

but I'm not sure if that would be allowed as i think the withdrawals must follow the rules for required minimum distributions.


The only Required distribution is ALL by year 10 so one can wait until year 10 and withdraw all at one time, but the income taxes on a large tradition IRA will surprise your

TenOC

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Posted: 03/20/21 01:53pm Link  |  Quote  |  Print  |  Notify Moderator

Looks like a 10 year Mortgage Calculator will work very well. Not perfect but the 8% is only a estimate.

rk911

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Posted: 03/20/21 05:23pm Link  |  Quote  |  Print  |  Notify Moderator

TenOC wrote:

rk911 wrote:

but I'm not sure if that would be allowed as i think the withdrawals must follow the rules for required minimum distributions.


The only Required distribution is ALL by year 10 so one can wait until year 10 and withdraw all at one time, but the income taxes on a large tradition IRA will surprise your


well that puts you in the driver's seat. i see on your other post that a mortgage calculator works pretty well. good luck.

Antonio_Ross

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Posted: 06/09/21 05:37am Link  |  Quote  |  Print  |  Notify Moderator

Thanks for the information and these calculations. I'd like to add that an inherited IRA is an account that is opened when an individual inherits an IRA or employer-sponsored retirement plan after the death of the original owner. An individual who inherits an Individual Retirement Account (IRA) (beneficiary) can be any person - a spouse, relative, or unrelated party or organization (property or trust). However, the rules for handling an inherited IRA are different for spouses and non-spouses. I learned this information from videos on YouTube. I found a lot of such videos there and noticed that in most cases they were published by accounts to which more than 77 thousand subscribers were subscribed! I am sure this is because their authors have repeatedly buy youtube subscribers to quickly increase their number.

* This post was edited 06/13/21 05:00am by Antonio_Ross *

philh

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Posted: 06/09/21 03:41pm Link  |  Quote  |  Print  |  Notify Moderator

I'll start by stating I'm not an expert. Please confirm for yourself that you are getting correct legal advice.

I recall, you had a choice to either take it over 5 years, or over your lifetime. With my mom's IRA, I took it over 5 years. With my father in law, wife choose over her lifetime.

Gdetrailer

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Posted: 06/17/21 01:36pm Link  |  Quote  |  Print  |  Notify Moderator

philh wrote:

I'll start by stating I'm not an expert. Please confirm for yourself that you are getting correct legal advice.

I recall, you had a choice to either take it over 5 years, or over your lifetime. With my mom's IRA, I took it over 5 years. With my father in law, wife choose over her lifetime.


Starting in 2020 the IRA rules have changed for Inherited IRAs.

See HERE for full details.

In a nutshell from above website..

"What are the New 2020 Inherited IRA Rules and How Does it Impact Beneficiaries?

There are two major changes under the new SECURE Act rules in 2020 and beyond:

Inherited IRA account owners are not required to take Required Minimum Distributions.
Inherited IRA account balances must be fully withdrawn within ten years of inheritance.

While a beneficiary isn’t required to continue RMDs, he/she can no longer stretch out distributions and control the tax obligations over their lifetime.

The entire account balance must be withdrawn – and taxes must be paid – within ten years of inheritance."


Change was made in order for IRS to get any and all taxes from the Inherited IRA at a much faster rate than if it was stretched out over ones lifetime..

However, one should consult with with your local tax folks to get the full scoop on your specific situation..

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