Tax Attorney question

[funkendrenchman]

I have a question about how to deal with inheriting an IRA from someone who had a federal tax lien in a situation where probate will not be opened.

Any experts that can assist?

[Art Shirk]

Whether you get good or bad advice in this thread, you will want to actually hire an attorney, so unless you want to just curb some curiosity in this thread, you are better asking for attorneys recos. You in Asspen?

[Marshall Tucker]

I would suspect the IRA is fully subject to offset, assuming the lien is valid.

/ not an attorney though, just CPA.

[funkendrenchman]

Whether you get good or bad advice in this thread, you will want to actually hire an attorney, so unless you want to just curb some curiosity in this thread, you are better asking for attorneys recos. You in Asspen?

Yes. I'm looking for solid advice and will hire someone if needed. Just seeing if anyone here had that background or could recommend someone.

[exsparky]

There is nothing more expensive than a cheap attorney.

Get a good one based on recommendations though, not price.

[Caucasian Asian]

I inherited an IRA but there were no federal tax liens.
But I am in Canada and the IRA was in the US.

I hired an accountant and a lawyer.

[Rideski]

Tax atty q’s for 2020? In on the first page of eleventy billion.

[Core Shot]

Interesting. I assume you were beneficiary of the ira.

But no probate? E.g. no will? Any other assets intestate that could be attached for the lien? Not sure what the irs preference is. Usually house is the greatest asset. If so, the heirs will retire the lien out of sale proceeds.

If no other assets, I’m guessing they’ll track you down eventually. But if lien is less than the ira, take the money and see who comes a knocking.

[funkendrenchman]

Interesting. I assume you were beneficiary of the ira.

But no probate? E.g. no will? Any other assets intestate that could be attached for the lien? Not sure what the irs preference is. Usually house is the greatest asset. If so, the heirs will retire the lien out of sale proceeds.

If no other assets, I’m guessing they’ll track you down eventually. But if lien is less than the ira, take the money and see who comes a knocking.

The estate has no value. The only assets are a cheap car, furniture and clothing. House is underwater. That’s why probate isn’t being opened.

The lien is less than the IRA. I want to know if it can be settled for less than the full amount. And I don’t want the IRS coming 2, 5, 10 years down the road after who knows what has happened with the IRA pay outs in the meantime. I’d rather pay upfront if I will have to pay down the road. How do I pay it? Before the IRA transfer? After? I don’t plan on taking a lump sum so I won’t have the cash on hand and I don’t want to pay the higher taxes to take more.

Tricky situation huh?

[goldenboy]

PM sent

[Core Shot]

Yeah. Tricky. But fuck it. Keep your head down and see what happens.

Get a financial advisor to help with distributions. 2020, you can no longer stretch distributions over your expected lifetime
Need to pull it all out over ten years. If you fail that, penalties suck. can pull it all on year ten, apparently.

It’s not clear that the irs properly attached and liened the ira. Let them find it.
It would suck to have them knocking later, but more likely it slips through the cracks.

I’d let it ride. See who knocks on the door.

Worst case, they come knocking In a few years, you can always pull money to pay the lien. Hopefully, that’s not taxable income since you have an offsetting deduction, but not sure about that.

PS. Not a tax attorney. Not even a member of a bar anymore.

[Hopeless Sinner]

Some of the following is no longer accurate as it doesn't reflect changes made in the Secure Act as Alembical points out.

The OP needs to get squared away w his liability on the lien, if any, since his RMD's are based on the value of the IRA. Paying the lien off, if necessary, w pre tax dollars from the IRA is the way to go. It can wait till after tax season, but there might be a required minimum distribution (RMD) by 12/31/2021 depending on the year of the death. There is a 50% tax for being late on a RMD.

I would take the payout and put it at Vanguard or perhaps where the IRA is now and declare that's it's an Inherited IRA. They will do the RMD calculations for you for free and provide you w the documents needed to file w your yearly taxes until the IRA is zeroed out. My Inherited IRA RMD is based on my expected lifetime.


From Schwab:

You transfer the assets into an Inherited IRA held in your name. Required Minimum Distributions (RMDs) are mandatory and distributions must begin no later than 12/31 of the year following the year of death. Distributions are spread over the beneficiary's single life expectancy.

[alembical]

I just want to point out that Russet's advice had been right, but now after the Secure Act, there are no RMDs for inherited IRAs, but the account must be liquidated within 10 years (under most situations). Everything else I agree with though.

[Hopeless Sinner]

I just want to point out that Russet's advice had been right, but now after the Secure Act, there are no RMDs for inherited IRAs, but the account must be liquidated within 10 years (under most situations). Everything else I agree with though.

Thanks for correcting me. Nothing worse than bad advice.


"Advisors will soon need to know two sets of rules, those pre-SECURE Act and post-SECURE Act. For purposes of RMDs, the SECURE Act provisions would go into effect on Jan. 1, 2020. As such, anyone who dies before Jan. 1, 2020, and any existing inherited IRAs would fall under previous RMD rules. Anyone who dies after Jan. 1, 2020 would fall under the new SECURE Act rules. With not much time to prepare, millions of Americans need a review of beneficiary designations, trust terms and tax implications."

I am planning on leaving my inherited IRA to my kid. I'm not sure if I need to rethink that strategy or not. Hmmmmm.......

[RootSkier]

Thanks for correcting me. Nothing worse than bad advice.

This is absolutely unacceptable behavior for the padded room, JONG, where the rules are:

1. Deny everything.
2. Make counter-accusations.
3. ???
7. Profit.

[Hopeless Sinner]

This is absolutely unacceptable behavior for the padded room, JONG, where the rules are:

1. Deny everything.
2. Make counter-accusations.
3. ???
7. Profit.

Thanks.

[muted]

Thanks.

For some reason this doesn't feel like a genuine 'thanks'.

[neufox47]

This is absolutely unacceptable behavior for the padded room, JONG, where the rules are:

1. Deny everything.
2. Make counter-accusations.
3. ???
7. Profit.

5. Blame the wind.

[tetzen]

5. Blame the wind.

8. Buy lottery tickets with said Profit.

[Timberridge]

If the cost of the attorney minus the lien is greater than the IRA, I'd disinherit myself.

Other than that, I have no other advice.

[funkendrenchman]

I talked to a lawyer and he thought that based on all his experience, it would be very unlikely that the IRS would come after the IRA even though technically they can. It just wouldn't be worth the effort due to the lien being only $30k.

There is the option to pay before it is transferred to me, but he said if he were in this situation, he'd take the chance. He said he's dealt with a similar situation a dozen times or so and the IRS has never bothered with it.

[Art Shirk]

I talked to a lawyer and he thought that based on all his experience, it would be very unlikely that the IRS would come after the IRA even though technically they can. It just wouldn't be worth the effort due to the lien being only $30k.

There is the option to pay before it is transferred to me, but he said if he were in this situation, he'd take the chance. He said he's dealt with a similar situation a dozen times or so and the IRS has never bothered with it.

Lay that 30k aside for a few years before you spend it on nose beers and loose women.

[funkendrenchman]

Lay that 30k aside for a few years before you spend it on nose beers and loose women.

Haha. It's not going anywhere.

[Hopeless Sinner]

For some reason this doesn't feel like a genuine 'thanks'.

Oh it is. Even when I was responding I knew it would draw fire for being apologetic. I wanted to reply to the JONG w something witty but for some reason it's just not my style on internet forums. I do appreciate being called a JONG, it's a term mostly, sometimes, but not always used in fun and I thought using it in fun was his intention - it's a part of TGR.

So yeah it was a genuine "thanks."

[grskier]

Haha. It's not going anywhere.

You could blow that on a man purse in town though... pretty easy. So just don't scuff it up too bad, in case you need some quick liquidity.