rolling over inherited money

[thehoss813]

I have a client come in today with a $100,000+ 1099R from her mother's (who passed away last year) retirement fund. She has decided to give 100% to her son (which is a 9y/o) for college. Her tax bill is over $10,000.00 I usually work with lower income taxpayers and hasn't had much experience with this type of return. I know there is a way to lower her tax bill with a rollover or something but I can't seem to locate the proper info to accomplish this. With this being the last day I need info right away. Any suggestions or info would be greatly appreciated

[ljwalters]

I don't think she can roll it over to a 9 year old.

[jasdlm]

She could have rolled it over to a beneficiary IRA in HER name and taken minimum distribution payments, but it is too late for that now.

[rfassett]

Agreed. The ship has sailed. Her only recourse now is to pay the tax and move on.

[Randall]

Yes, too late. Inherited IRAs must be a direct transfer. Quirky rule yes.

[jainen]

>>She has decided to give 100% to her son (which is a 9y/o) for college.<<

What an awesome gift! And you have just the tax savings for her--a 529 plan. She will get a decade or more of absolutely tax-free growth, which can be used not only for tuition but even living expenses when the student goes to college. A variation is to lock in today's costs with prepaid tuition credits. That is attractive since education costs seem to be rising faster than general investment yields. See Pub 970, and have her contact your local state university.

[Cathy]

The above post is a good example of why we keep jainen around. The glass will always be half full rather than half empty as long as jainen is hanging with us.

My comment above has got to be worth at least 2 brownie points! So please remember those points, jainen, when I post an idiotic answer to another's question. Thanx!

[thehoss813]

Thanks to all of you guys. She will go with the 529 plan since her ship has already sailed.