patrick.net

Shouldn't have to pay any tax on it, and it isn't earned income so it wouldn't qualify for retirement plans, IF it is inheritance. Do whatever you want with it. You'll only pay taxes on interest, dividends, but it still won't be earned income.

How are you going to stuff 6 figures of personal money into a small business ira? That doesn't make any sense. Wtf does pre tax mean? Estate tax exemption is 5 million or so. That makes even less sense.

As far as I know, I owe tax on this money now unless I roll it over into a pre tax account like a 401-k.

It is an investment account.

IF it is a six figure inheritance, you shouldn't owe any taxes. It does not meet the taxation threshold for inheritance.

You can only put earned income into retirement plans. That's money you work for where you get a paycheck, or profits you earn in a business aka sole proprietorship.

Ok,
Please excuse me for not knowing what to do.
I am self employed ( currently only with savings) so setting up a solo 401-k is not so dumb. (please correct me if I am wrong).
My parents passed last year.
I received a lump sum ( less than 20k) from the estate right away as well as an annuity.
My accountant had me pay taxes on these amounts.
I need to take possession of the rest of the estate by the end of the year.
I saw last year by searching online that it should be tax free but I am not a tax professional.
I am asking here to learn so be kind.

Earnings from an annuity could be taxable, but not lump sums that don't meet the inheritance threshold. Depends on how the annuity was purchased, but most annuities don't pay out after death unless they were set up that way, usually for a spouse rather than a descendant. If the 20k was income from an annuity, then the estate probably had to pay the taxes on it on behalf of the deceased.

Your accountant should know this stuff.

Annuities are complex and there are many kinds, but some can be set up for children or modeled in all kinds of different ways.

My brother was the executor so I do not know the estate tax situation. :(
I did indeed pay taxes on these amounts,
My accountant spent a bit of time on the phone in front of me with their retirement plan company.

I just don't want to get taxed to death.

I can't thank you guys enough.

If it is an inherited IRA or retirement fund that was funded with pre tax, deferred tax money, then yes, distributions will be taxable, unless it is an inherited Roth IRA, which should be tax free and the earnings tax free. Any asset the parents acquired with sheltered pre-tax money will be taxable, or it's distributions taxable. So you have to know the origins of the money involved.

When people say "lump sum" they tend to mean a post tax amount sitting in an savings account of some kind.

Klondike says

I did indeed pay taxes on these amounts,

My accountant spent a bit of time on the phone in front of me with their retirement plan company.

I just don't want to get taxed to death.

I can't thank you guys enough.

You really need to trust your accountant not ask people on the internet. Annuities can be horribly complex and there are many variations each with it's own rules with the IRS. You really, really don't want to post the level of detail needed for someone (if anyone were to actually be that knowledgeble in the arcane world of annuities) to make a reasonable suggestion on a forum.

You will only be taxed on what was untaxed in the annuity. If it was a pre tax annuity then the entire amount is taxable, as it properly should be since taxes were deferred. If annuity was paid with income after taxes then only the gains are taxable. I wasn't aware that a annuity could be rolled over into an IRA for a non spousal recipient. If so you will still only be deferring taxes.

If it's in an IRA, yes, you do get to pay income taxes on it, which are most likely substantial.

You can always overpay for a shack then sell to the next sucker.It's always been a never ending profit stream.
It's 2015 the cheapest shack should be listed at 8 figures.
I have some land you might like.It's covered with water, snakes & gators.