What should I do with my inhereted IRA

Question

Hello BP Family,

My Father passed away on Oct 7th, leaving me his IRA which is valued at $750K, as of today. My wife and I both work full-time jobs, and own 3 rental properties (in a series LLC) putting us in the 35% tax bracket. I'd like to gain some insight into the best way to handle this amount of inherited money from a tax avoidance perspective, taking our current income level into consideration. I've done some research online but haven't found anything overly creative or efficient. All I know at this point is that I have 10 years to pull all $750K out, leaving me with a significant tax burden. Any insight or shared experience would be greatly appreciated.

Thanks in advance!

Chris Seveney · Answer

@Marzel Hurbs

If you go send direxted ira for real estate I would recommend putting it with quest trust, nuview or Midatlantic ira

I have no affiliation with them but we are a sponsor of a fund and have found they their processes down and understand real estate and get the funds out the door on time.

Cheapest is not always the best.

John Williams · Answer

Marzel, I am sorry for your loss. I can't imagine trying to mourn and also deal with the stress of the finances as well! One creative option to consider is a self-directed IRA. You could possibly roll those funds into a self directed account. That would allow you the flexibility to get involved with private lending (as just one example). Self directed accounts can provide enormous flexibility.

Jeffrey Dixon · Answer

A Self-Directed Inherited IRA will allow you to invest in assets like real estate. However, you will still need to take all the cash or assets out in the next 10 years.

Aaron Byrne · Answer

Hi Marzel,

So sorry for your loss. Best wishes to you and your family.

I think the advice you received above is excellent. Dmitriy Fomichenko is a great resource for anything SDIRA related and that would be a good option for your situation.

As to one of those alternative investments that is real estate related, you could explore investing in secure trust deeds. Essentially, using the inherited $750k to become the bank and securely lend money to others for the truly passive, real estate-backed, cashflow experience. This will allow you to diversify your portfolio with an uncorrelated income-producing asset to supplement your rental property cashflow.

Good luck with the rollover and investment process.

Marzel Hurbs · Answer

Thank you @Dmitriy Fomichenko for the response. I am not familiar with self-directed IRAs but will begin doing some research!

Dmitriy Fomichenko · Answer

@Marzel Hurbs,

One option you have is to rollover this account into self-directed IRA so you can invest in real estate and other alternative investments.

Marzel Hurbs · Answer

Self Directed IRAs seem to be the popular option. Thank you for the suggestion @John Williams

Marzel Hurbs · Answer

Thank you for the condolences, I appreciate the advice @Aaron Byrne. You all have given me some things to think about. I'm meeting with my father's Financial Advisor and will be settling on an option later today.

Marzel Hurbs · Answer

Thank you @Jeffrey Dixon. This is starting to sound like my best option.

What should I do with my inhereted IRA

Most Popular Reply