This year, I inherited a Beneficiary IRA account. Since I need to withdraw everything within 10 years anyway, I decided to start now and withdrew 150k without thinking much about it.
I read online that big changes in income could trigger an audit.
I wouldn’t stress about an audit. It’s not uncommon to take a large withdrawal like this.
That said, pulling out $150k in one year might not have been the best choice for taxes. If the account has $1M+ it might make sense, but spreading it over 2-4 years could save you money in taxes.
This isn’t something that would trigger an audit. Lots of people have major income changes—new jobs, marriage, divorce, big distributions. As long as you report the income and pay the tax, you’re good.
You can roll the money back into an IRA within 60 days to avoid taxes for now. If possible, maybe split it—$75k this year and $75k next year to stay in a lower tax bracket.
Brady said:
You can roll the money back into an IRA within 60 days to avoid taxes for now. If possible, maybe split it—$75k this year and $75k next year to stay in a lower tax bracket.