Inheritance as a college student
My mother passed away recently. I received straight up ~200k with another 200k in her 401k, which is under my name now. I know it is not life changing, but as a college student with no vehicle payment and no outstanding student loans. I hope to get a head start on saving. I want to move the 401k out of the crappy fidelity funds it is in now and into something more aggressive. I am worried about tax ramifications as I make barely above minimum wage at an on-campus job. TL;DR, I want to move the 401k into an IRA or brokerage account while saving the most I can on taxes/withdrawal fees, any advice would be greatly appreciated as I am on my own with this.
Thank you
First, sorry to hear about how you had to come into that. Second, I wouldn't consult a bunch of monkeys on a forum. Unless one of our PWM brethren drops you a PM with some references to reach out to, I'd definitely keep things private and think through what you wind up doing.
As always, check with a lawyer and a tax accountant here... For the 200K in cash, you'll have to pay taxes on that accordingly. With the 401(k), you should be able to roll it into an Inherited IRA and draw down on the funds over a 10-Year window. There's a law called the SECURE Act which changed a ton of this stuff. In a nutshell, you'll basically be able to spread the withdrawal over a 10 year period, but you need to fully withdraw the funds by the end of the 10-year window. Fidelity has a good high-level overview to read. This way, you're only paying taxes on what you withdraw, except in the final year, where everything leftover has to be paid out and get taxed.
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