Beneficiary IRA ??

zone_8grandmaFebruary 14, 2008

I've done a search on this forum and haven't found a clear answer - and I've already told son to talk to an expert,

but...... if anyone here can help, I'd sure appreciate it.

Son is receiving a distribution from his late father's IRA. He's taking the distribution over 3 years, 17,000 per year.

Does he owe income taxes on it? I believe since it's inherited that he does not. Is that correct?

He's missed the deadline to roll it into an existing IRA - He does want to put it towards future retirement.

Any suggestions?

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terriks

I received a beneficiary IRA a few years ago. There are special rules for beneficiary IRAs, which are rather complicated. He will owe taxes on all disbursals. It cannot be directly rolled over into his own IRA, it must remain a beneficiary IRA, or taxes will be immediately due. I know that I am actually required to take out a portion of mine every year. The amount is based upon my life expectancy. When I received the b-IRA I was 47, and according to the actuarial tables that they used, they determined that I had another 47 years left (crossing fingers that they are correct!). I need to take a minimum of 1/47th out each year, and it does count as taxable income that year. If your son wants to change the account in any way he needs to be VERY careful.

Here is a link that might be useful: Beneficiary IRA rules

    Bookmark   February 14, 2008 at 5:14PM
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terriks

Below is another very good article on beneficiary IRAs

Here is a link that might be useful: Bankrate.com article

    Bookmark   February 14, 2008 at 5:20PM
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zone_8grandma

Thanks so much for that info and link! He's missed the deadline talked about in the article. I've already suggested that he talk to our CFP. Now I'm going to make sure he does!
Thanks again.

    Bookmark   February 14, 2008 at 6:00PM
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