IRA Withdrawls

My mother and father have passed away. My attorney has told us to leave the IRA accounts alone for now. Re: taxes that will have to be paid. Is the a way to withdrawal without taking a big hit on taxes?

You need to address a host of issues, the following is only a few of them:

• Required Minimum Distributions (RMDs) have been waived for 2009. However, if your parent whose IRA is in issue attained the age of 70.5 in 2008 there still may be a required distribution. Don't miss it if there is since the penalty for not taking RMD is 50%.
• The beneficiary designations for the IRA accounts must be reviewed. You did not comment on these.
• If there is a tax on the estate (in 2009 the estate must exceed $3.5 million to incur a federal estate tax, although many states exact estate taxes at a lower level) your attorney should review the will and advise you of how the tax allocation clause in the will directs those taxes to be paid. Generally, you would not want to accelerate IRA distributions to pay estate taxes since paying out more than you have to under the RMD rules will trigger income tax.
• If the IRAs are to be treated as inherited IRAs carefully review with your attorney how to retitle the accounts to avoid triggering gain, e.g., "Dad's Name, deceased, fbo Son's Name", etc.
• Review with your attorney the distribution requirements and options you might have.
• Bear in mind that inherited IRAs aren't protected from your claimants and creditors as an heir.