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Many Florida based baby boomers are inheriting IRA accounts from their parents. Hiring a Florida based Wealth Management firm to help steer their new investments will be a wise decision for many. There are a lot of tax rules with inherited accounts that could be costly if not followed properly.

When someone inherits an IRA, the bottom line is that taxes will eventually be paid; the question is when and by whom. If that IRA has thousands of dollars in it you probably don’t want to pay tax on those thousands of dollars all at once, do you? As the beneficiary of the IRA you would probably like to keep that money tax free just as your parents intended for you.

Remember, you cannot simply take the money out of the decedents IRA and deposit that money into your own IRA. To do so, would mean you’re first taking that money as income and you’ll have to pay taxes; also, after you do that, you may not even be allowed to place those sums in an IRA. Instead you’ll need to create a new beneficiary IRA account, usually with the same institution the original IRA was housed. You then can transfer the funds to a local institution in Broward County or even Plantation, Florida.

With a properly qualified beneficiary IRA account, you’ll need to take a certain amount of money out of the account each year. The amount you have to remove is based on your age and life expectancy as well as the total value of the account. All Floridians are able to take more than the minimum, but all the money you withdraw from the IRA is taxable income.

Failing to withdraw the required amount of money from your beneficiary IRA is a mistake that people often make and one that can easily be avoided with proper Wealth Management. The more common mistake though is where an individual thinks they can simply start to use the inheritance without paying taxes. Once the IRA is yours and properly set up, it is also important to assign beneficiaries in order to avoid excessive estate tax.