A spouse’s options when inheriting an IRA
Q: A surviving spouse who inherits an IRA can either roll it over into a personal IRA or retitle the account as an inherited IRA in his or her name. Which one is better to do?
A: It really depends on how old the surviving spouse is when inheriting the IRA and how soon the money might be needed. Keeping the money in an inherited IRA allows a cash-strapped spouse younger than 59 ½ to access those funds without incurring the 10% penalty for early withdrawals, though taxes would still be owed. Unfortunately, required minimum distributions also come with the territory.
A spouse who is unlikely to need the money before age 59 ½ or who is already past that age is better off rolling the funds into a personal IRA. That way, the money can continue to grow, with no distributions required before age 72.
A young surviving spouse could also start out keeping the money in an inherited IRA and roll it over into a personal IRA after turning age 59 ½, says Bob Foland, a certified financial planner with The IRA Specialists in Centennial, Colorado. That might be a good compromise for a spouse who wants to preserve ease of access in their younger years, because once the money is rolled over from an inherited to a personal IRA, you cannot roll it back.
Q: My wife and I will each pay a monthly Medicare Part B premium of $475.20 this year. We file a joint tax
return. Most of our income comes from investments in my name only. Would it make sense for us to file separate tax returns to lower our collective monthly premiums?
A: It doesn’t pay to file separately. In fact, it’s likely to cost you more in income taxes without changing your current premium. Couples start paying $475.20 each in 2021 when their joint 2019 income hits $330,000. (Medicare bases premiums on income two years prior.)
A married couple filing separately each pays the same premium starting at a much lower income — $88,000. Meanwhile,
something similar happens on your federal tax return, with higher tax brackets ensnaring you at lower incomes if you file separately, and you also sacrifice any tax credits and deductions for married couples.
A better solution: Ask an accountant for ways to lower your modified adjusted gross income to reduce your Medicare premium.
DAYTONA BEACH — Not a day goes by without the Waltrips — one of stock car racing’s first families — thinking of Dale.
Michael Waltrip delivered his seminal victory on the sport’s darkest day, a memory that haunts him 20 years later as NASCAR prepares to kick off the 2021 season at Daytona.
Darrell Waltrip said the late Dale Earnhardt Sr. still comes up so often in conversation, it’s as if he’s still around. Instead, all that remains is a larger-than-life legacy and a sport that, sadly, is better and safer because of the death of perhaps the biggest star it will ever have.
“I live with it every day,” Michael Waltrip told the Orlando Sentinel recently. “It still hurts the same. It’s something I’ll never get over.”
While Waltrip took the checkered flag during the 2001 Daytona 500, tragedy unfolded behind him.
Earnhardt, 49, didn’t survive a final-lap crash into the wall on Turn 4.
Waltrip may have suffered more than anyone outside the Earnhardt clan.
Driving his first race for
Dale
Earnhardt Enterprises, Waltrip could not wait to celebrate his maiden NASCAR victory with his boss and close friend. The soul-crushing news instead arrived a few hours later.
The man known as “The Intimidator” turned out to not be invincible, leaving some 200,000 fans on hand stunned, fellow drivers devastated and a sport scrambling to pick up the pieces.
In a way, the mix of emotions two decades later comforts Waltrip, 57.
“Part of me is happy about that because it means how much he meant to me,” Waltrip said. “Part of me is sad, but that’s part of my life . ... I just know he was doing what he loved to do when he left the world.
“That’s a great way to leave, if you ask me.”
A subdued Waltrip had little else to say on a Sunday in January following a round of golf. Waltrip’s chattier older brother filled in some of the gaps.
Dale Earnhardt is a familiar topic for the 74-year-old Darrell Waltrip.
“There’s hardly a day that goes by that someone doesn’t say to me, ‘What do you think Dale would think about that?’ ” he said. “It’s as if he’s not dead.”
Waltrip and Earnhardt were kindred spirits.
The two Hall of Famers first squared off on the dirt tracks throughout the South.
A friendship soon flourished, built on respect, competition and the pursuit of similar goals.
Waltrip, who was four years older, made a big splash earlier, winning his first of 84 Cup Series races in 1975 in Nashville. Earnhardt debuted as a full-time driver in 1979, picking up his first of 76 victories during his seventh race, at Bristol.
For the next two decades, the two titans of their sport shared ideas, traded paint and captured checkered flags and championships — a record-tying seven by Earnhardt.
“I helped him; he helped me,” Waltrip said. “I tell people all the time — it’s kind of getting old, I guess — but we were frenemies. Dale was the best guy in the world off the track. He was tough on the race track.
“You just didn’t want to mess with him.”
Many competitors wilted when the No. 3 Chevrolet appeared in their line of sight. Earnhardt’s fans adored his frequent bumps, bold moves and give-no-quarter attitude on track.
Everyone watching was mesmerized.
“Dale Earnhardt was the man — still is the man,” veteran driver Ryan Newman said. “Nobody’s replaced him. Nobody can replace him.”
Earnhardt’s impact went beyond the asphalt.
Hidden behind those ubiquitous sunglasses and cool exterior was a kind heart and a sharp mind.
Behind the scenes, no one possessed Earnhardt’s gravitas in the garage.
“He had [NASCAR CEO] Bill France Jr.’s ear,” Waltrip said. “He could go in that truck and tell Bill France what he thought should be done — and nine times out of 10 that’s what they did. He loved the sport, the people in the sport respected him and he had a lot of good ideas.
“I think that’s why most people in the garage and outside the garage still miss him and long for him to be around because of his leadership.”
Earnhardt’s death duly set a new and necessary course for NASCAR.
Fatalities no longer would be considered the cost of doing business.
Kenny Irwin Jr’s life-ending crash during Cup practice in New Hampshire, the Truck Series deaths of John Nemechek in 1997 and Tony Roper in 2000, and even the demise of Adam Petty — the 19-year-old grandson of “The King,” Richard Petty — during a 2000 Busch Series practice had not been enough to motivate decision-makers to truly evaluate the safety of their sport.
“We got those little knocks. But you know what, I’m not sure if we really paid attention,” said Fox analyst Larry McReynolds, Earnhardt’s crew chief during his 1998 Daytona 500 win.
“But on the final corner of the final lap of the 2001 Daytona 500, we didn’t just get a knock, the door got kicked off the hinges and it woke all of us up.
“‘We’re not where we need to be with safety.’ ”
Earnhardt remains the last on-track death in NASCAR’s top three national series.
“The impact is still resonating today,” said Kurt Busch, the only current Cup Series driver who ran in Earnhardt’s final race. “The way that we built the cars, the way the safer barriers are mounted, the helmets, the HANS devices, the seats. The next two decades were the safety era.
“That’s been the impact and the legacy that I’ve been a beneficiary of.”
No one likely has benefited more than Newman.
Newman left a Daytona Beach medical center holding his two daughters’ hands 48 hours after a horrific and life-threatening crash on the final lap of the 2020 Daytona 500. Months later, Newman called himself a “walking miracle.”
Earnhardt ultimately sacrificed his life to save his sport and future drivers.
“There’s no doubt in my mind that a lot of it is because of who it was,” Newman said of the improved safety measures NASCAR embraced after losing a superstar. “But that’s the way life works.”
Earnhardt’s life is what Newman chooses to celebrate now.
The 43-year-old joined the Cup Series in 2002 and had faced Earnhardt only once on the track, as a 22-year-old at the 2000 Phoenix race.
Newman cherishes the memory even now, 688 Cup Series starts later.
“People remember Dale Earnhardt for the way that he raced and the way that he lived,” Newman said.
“I knew him as the guy that drove the black 3 car and if he didn’t win it outright, he’d knock somebody out of the way to get it done and stood in victory lane and smiled about it. A lot of people loved that and a lot of people hated that.
“That’s the legacy that I will always remember him by.”
Darrell Waltrip will never forget Earnhardt’s big smile, those squeezes around the neck or the No. 3 car breathing down on the competition like a runaway train.
“I’m not going to say he’s the best driver I ever raced against, but he was the most aggressive driver I ever raced against,” Waltrip said. “He just would not take ‘No’ for an answer. He was tenacious.
“A lot of other guys just didn’t have that desire.”
Twenty years later it remains clear to anyone who watched him, knew him and lost to him, Dale Earnhardt never will be replaced.
“As a friend of mine used to say, he was one to a box,” Waltrip said. “You got a whole box full of drivers, but there was one Dale Earnhardt.”