re: Decisions on inherited 401k

I'm not a lawyer, but I did sleep in a Holiday Inn last night.

I would go for tax efficiency over the ten years. Being forced into a bracket higher than 24% is criminal if you can avoid it. If you don't withdraw enough early, you could force yourself into higher tax brackets in later years depending on how much we are talking. So, that's step 1.

AFAIK, distributions from the IRA/401k stay in the trust until you disburse them to the trustees. Presumably, another bank account is associated with the trust where you can put these proceeds until you're ready to do that. Better yet, a separate brokerage account associated with the trust so you can invest whatever you don't directly disburse to trustees.

You mention putting the proceeds into a non-taxable account. Individuals can invest in a Roth IRA (if they meet qualifications), but I'd be surprised if you could do that within the trust. Check with a professional to find out.

Someone said it, but I bet the trust has provisions for you to hire someone to help answer these questions (and to reimburse you for your time and expenses). Of course what you do is up to you, but if the assets are substantial, then that's probably what they would want you to do. Good luck.

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Thanks for your genius insight.

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If you have to ask for advice on a message board, perhaps this is not your cup of tea.

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I’m the person their father chose because I’m honest

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I don't blame you for leaving this detail out, but it could be important OP. Especially when giving the kids advice with the money or not allowing them an option they prefer.

I made an assumption (and everything that goes with it) that you were likely something like a step dad and their grandfather passed away.

Making decisions for children with money when they are not your actual children, can sometimes be easier and sometimes more difficult.

My mother was the Trustee for a fund for her sister's kids' higher education. It was 6 kids and only 2 wanted to go to college and 1 had to drop out essentially because she refused to stop paying due to his grades and progress.

If 32% is inevitable later, I would take as much as possible up to the limit of the 24% bracket. I think you can assume that the best that we can hope for is brackets to stay the same, but certainly not get better.

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You should be consulting with a professional on this topic, not asking questions on a message board on what to do with someone else's money.

I ask for advice all the time on here, but it's for my money. I would never ask a message board what to do with money I was entrusted with.

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I absolutely agree he should seek professional consultation, but I would disagree going in blind. A message board is the perfect place to help educate yourself so you go into the consultation not having to ask completely stupid questions and costing yourself valuable time and money.

He should work a plan up, and then seek professional guidance.

I’d ask the kids whether they are maximizing their 401k’s/IRAs. If not, they could put as much of their wages into those accounts as they can. It lowers their income for the year, effectively deferring some of the inherited 401k impact.

Another forum to check out is Bogleheads. There are a number of financially savvy people on that board, and your question probably has come up there already.