Discussion:Inherited IRA when totake a distribution
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| 22 March 2006 | |
| Client's brother died in 2003, she is a beneficiary of his IRA. The original company sends client a 1099R for a partial distribution, which the IRS catches. She takes the entire IRA, including the 1099R listed distribution, and rolls it out of the original company into another IRA. IN 2005 she withdraws all the IRA money. The company gives client a 1099R with a 1 code.
Questions: 1. Do we have to take a distribution in the year of death or can we withdraw all the money in any one of the first 5 years? 2. With the above fact pattern, can I deduct the amount previously taxed? | |
| 22 March 2006 | |
| If decedant was in distribution at time of death the required minimum distribution must be paid to the beneficiary.
The only beneficiary allowed rollover treatment for an inherited IRA is spouse. Your client has taxable income for the partial distribution, taxable income for the total distribution and all sorts of problems with a non-qualified IRA. | |
Taxestaxes (talk|edits) said: | 1 May 2009 |
| I would like to elaborate on the above situation. I am trying to assist someone...somewhat :)
Client inherited IRA from step-father when he died.....she was told by bank it was rolled into her name.....they have now contacted her and told her this is 5th yr and money must be withdrawn....I want to make sure I understand right, she cannot roll this into her name? She has taxable income for the entire amount of the IRA? I have read the pub and want to make sure I am not missing something. SHe is very upset with the bank because she claims they told her she didnt have to do anything until she was 59 1/2 and then she could take a little out each year with no penalty. I am trying to play mediator between her and bank! lol Just looking for some guidance myself. Thanks. | |
Taxman3132 (talk|edits) said: | 1 May 2009 |
| taxestaxes--my understanding is exactly like how you stated your example. non-spouse beneficiary has up to 5 years to withdraw the funds. no penalty--code 4 | |
Taxestaxes (talk|edits) said: | 1 May 2009 |
| I guess she could put $5000 in an IRA and get that deduction? and $5000 in her husbands name; other than that, she's paying taxes!! Shes not happy, its about $100,000 she will have to show as taxable income! | |
