From 24/7 Wall St. · Jake FitzGerald · · 50s
Inherited Portfolio Worth Less Than $1 Million
Inherited portfolios often lose value due to taxes and fees.
In brief
Inherited portfolios often lose value due to taxes and fees. A $1 million inherited portfolio may be worth only $700,000 after taxes and fees over ten years. Originally reported by 24/7 Wall St..
Inherited Portfolio Value
A $1 million portfolio statement may not reflect real spendable money.
Tax Impact
Federal and state taxes eat into inherited portfolio value.
IRA Tax Rule
Inherited IRAs face a 10-year tax distribution rule.
Tax Example
A $1 million IRA at age 58 adds $24,000 yearly federal tax.
Tax Calculation
Ten years of tax costs $240,000 federal plus $5% state tax.
Taxable Accounts
Taxable accounts reset cost basis to fair market value.
Fee Costs
1% annual fees on $1 million cost $10,000 yearly.
Protective Steps
Map account types and model tax impact before withdrawals.
The one thing
A $1 million inherited portfolio may be worth only $700,000 after taxes and fees over ten years.
