Josh Scandlen Podcast

After John died, Judy lived rather frugally, as do most retirees. So, when she died she still had $200,000 in her IRA. She left 50% each to her two children, Jimmy and Jenny.    Jimmy is a married Radiologist making $500k a year. Jenny is a divorced gas station attendant making $35k a year and heavily in debt. Jimmy has no cash flow needs so he rolls the $100,000 Judy left him into an inherited IRA. He still needs to take annual required minimum distributions. But while those distributions won’t be much initially because he is only 50 years old they will grow each year. Unfortunately for him, as long as he’s making the same income he’s going to lose 35%, or more, to federal income taxes.  Unlike Jimmy, Jenny is in desperate need of cash. Creditors are calling and she is late on rent.  She takes a lump sum distribution of the entire $100,000 which put her gross income for the year at $135,000. Her total tax will be around $23,800 once she takes the distribution, which means she is going to