re: Inherited IRA Question

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Depending when in the year you take the disbursement you may need to file estimated quarterly taxes during the year rather than waiting to pay the taxes on the disbursal when you file your tax return.

Otherwise you may be on the hook for penalty and interest on the "late" payment.

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Important planning piece. Don’t fret too much though, there are exceptions to the penalty. So long as you pay 100% of last year’s tax bill or 90% of the current one (or the total amount owed is under $1,000 but that’s going to be way under the taxes due on $30k-90k unless you take advantage of “filling your brackets” and are going to take less than the cost of your loans or the lump sum (the latter of which I would probably not do outside of weird cases)) you should be fine to let the money sit in a checking/savings account until tax day, if that is beneficial to you somehow.

I had two separate income “step” ups that had me very nervous about this concept until I realize that the way the law/rule is written, so long as you make a salary (typical w2) that is at least the year prior’s amount, and you haven’t adjusted your withholding, you will pay 100% of the previous year’s tax, so it almost works out to “first time is free” when it comes to not knowing that you should pay estimates in cases like this.





But it’s worth a couple hundred bucks to a CPA for good advice and how the “stretch” rules apply to you and could be used to your advantage and the tax implications of the handful of scenarios you’re considering.