bob_cville brings up an important point which the rest of us had overlooked. As more and more people inherit 401k's and IRAs, it is critical to understand that one needs to make the correct decision in such a case, BEFORE the funds are distributed. For our parents this was not an issue, the grandparents of Boomers didn't have these type of accounts. However, for us and succeeding generations, it is incumbent upon us to be aware not only of the current laws, but any future changes that will made in those laws by Congress. If you are inheriting any portion of an IRA, it's important that you know whether or not the owner was taking distributions. Once distributions are begun, they MUST be continued by the heirs. An IRA passed to multiple heirs may be split in any proportion the owner has specified. The heirs are best served by opening up a new IRA. Titling of this new IRA is very specific to avoid IRS problems. I've excerpted part of a WSJournal article on this issue: "...Inherited IRAs don't work like regular IRAs. If you inherit an IRA from anyone other than your husband or wife, you can't roll it into your own IRA. And you can't consolidate IRAs you inherit from different people into one account. So, if the heir had withdrawn the assets from a parent's IRA and deposited them into her own IRA, she would have undone the inherited IRA, making all its assets taxable. She also would have to remove any assets she deposited in her IRA above her allowed IRA-contribution limit for the year -- $5,000 if she's under 50, or $6,000 if she's 50 or older -- to avoid further penalties. But it appears that the account in question was left as is, except for being improperly titled. Thus, the error should be considered an administrative one that can be fixed. The reader would need to retitle the IRA so it's clear that the owner died and that she is the beneficiary. Ed Slott, an IRA consultant in Rockville Centre, N.Y., recommends using this format: John Smith IRA/ Deceased 1/1/2009/ FBO Mary Smith as beneficiary. (note: FBO means "for the benefit of") Make sure that the financial institution gets the titling right not only on the statements it sends to you, but also on the internal records it uses for reports to the IRS, he says. Some large IRA custodians use the beneficiary's name on the statements sent to him or her, but use the formal titling (as in the "John Smith" example, above) on the information it sends to the IRS to avoid confusing beneficiaries. After you have retitled the inherited IRA, you can stretch out withdrawals from the account across your lifetime, rather than being forced to withdraw the funds sooner. That gives you a chance to extend the time that tax-deferred earnings can accrue, possibly increasing your inheritance."

Update on my advice above to actually visit the country(ies) you are thinking of moving to, and our friends' advice that establishing foreign bank accounts BEFORE moving was something they should have done to avoid six months' worth of delays: The IRS is cracking down hard on ALL foreign investments, whether real estate, investment accounts, checking/savings. The penalties are huge, and although you can try to wrangle them down, it is a fact that taxpayers with smaller balance accounts are proportionately paying LARGER penalty fees than multi-millionaires who are deliberately hiding assets. The WSJournal had an article on this issue June 2014, but as it's subscriber only, I'll just post some excerpts: Expatriate Americans Break Up With Uncle Sam to Escape Tax Rules Record Numbers Living Abroad Renounce U.S. Citizenship over IRS Reporting Requirements WSJournal June 2014 U.S. offices abroad reported that 1,001 U.S. citizens and green-card holders had renounced their allegiance in the first three months of the year, according to Andrew Mitchel, a lawyer in Centerbrook, Conn., who analyzes Treasury Department data. That figure puts 2014 on track to top last year's total of 2,999 renunciations, he said, which was the most since the government began disclosing the data. Helping boost the exodus, experts say, is a five-year-old U.S. campaign to hunt for undeclared accounts held by Americans abroad….The tax dragnet has also swept up many middle-income Americans living abroad, prompting some to give up their U.S. citizenship. While people who renounce are NOT freed of taxes due for past years, they don't want to risk sizable taxes and penalties for them and their children in the years ahead, experts say. Nearly 8,000 taxpayers have renounced U.S. citizenship in the past five years, Mr. Mitchel found, compared with fewer than 5,000 in the preceding decade. ….U.S. officials launched their campaign after Swiss banking giant UBS AG admitted in 2009 that it helped wealthy American taxpayers hide money overseas. To avoid criminal charges, the bank paid $780 million to the U.S. and turned over information on more than 4,400 accounts, ending decades of Swiss bank secrecy. In May, Credit Suisse Group pleaded guilty to similar charges and agreed to pay $2.6 billion. Dozens of other Swiss banks are currently negotiating penalties with the U.S. Department of Justice, officials said. Following the UBS revelations, U.S. officials announced they would begin vigorously enforcing both new and long-dormant tax rules. Unlike other developed nations, the U.S. government taxes citizens on income they earn anywhere in the world. … The most common mistakes usually involved Americans failing to submit a form called the Foreign Bank Account Report, or Fbar. Since 1970, U.S. taxpayers have been required to file if they held one or more foreign accounts totaling more than $10,000 over the course of a year. Until the enforcement push, many Americans never filed an Fbar. The law is more than 40 years old, but "no one ever heard of it" before the crackdown, said Edward Kleinbard, a former chief of staff on Congress' Joint Committee on Taxation, and an expert in international tax law at the University of Southern California. Fbar penalties are as steep as 50% of the highest value of the account for each year no report was filed. The IRS fined one taxpayer for Fbar violations in four separate years, and a settlement reached this month in the case yielded $1.7 million in penalties, which was more than the account held at the time. …The typical taxpayer with less than $45,000 in undeclared accounts paid nearly six times the back taxes owed, while the typical taxpayer with more than $7 million in such accounts paid closer to three times their back taxes, Nina Olson, the National Taxpayer Advocate, an IRS ombudsman, found. … Scrutiny of Americans abroad will intensify, however, under the Foreign Account Tax Compliance Act, or Fatca, which Congress passed in 2010. The law's main provisions, which take effect in July, will require foreign financial institutions to report income of their U.S. customers to the IRS, much as U.S. banks and brokers file 1099 forms. Middle-class Americans "face overwhelming problems when they try to engage in standard financial practices, such as having a small business, saving for retirement, investing, buying life insurance, and making wills and trusts," because of the laws governing assets abroad, said David Kuenzi, a financial planner with Thun Financial Advisors in Madison, Wis., who works with expatriates. The U.S. tax code, for example, doesn't recognize Australia's version of an individual retirement account, Mr. Kuenzi said. American taxpayers with these accounts must file at least two forms a year declaring the account a "foreign trust," and paying taxes on annual appreciation. The penalty for failing to file can be as much as 35% of both contributions and withdrawals each year, plus 5% of the assets, said Mr. Hodgen, the Pasadena tax lawyer. *********** Hope this info is of use to others.

Another reason to work things so that there are no refunds, especially large ones ... ... originally, to avoid making interest-free loans to the government(s), via the IRS, needy though they are, being darn near broke. More recently, it appears ... to avoid scammers being able to make off with a substantial bundle ... of *your* money! There seems to be somewhat of an epidemic of the "Integitry-being-obscured-by-Dollar-signs"disease (and it's O.K. to substitute any other currency of your choice). What's this of being required to report refunds as income ... it was your income in the first place, that was reported last year, and too much of it forwarded to the IRS, back then, no? So it's actually your income that was previously reported and included in tax calculations earlier, right? Surely you shouldn't be required to pay tax again on the same dollar of income! ole joyfuelled ... who hopes to be able to pay no, or only a smidgeon, of income tax

Too many conversations going on here, but I will convey MY experience: My mother and father each had an IRA naming each other as beneficiaries. When my mother died first, my father inherited my mom's IRA--now he had 2. He changed both IRAs beneficiaries to the 3 children. We each had 33 1/3%. Upon his death, the IRA converts to a "Beneficiary IRA" which has different rules. Each of us kids could have taken a lump sum or spread it out over time. I didn't need the $$ so I receive an annual payment from each IRA. The number is based on MY age (minimum deistribution). I designated a % to be withheld for my federal taxes and I receive a 1099R each year. As executor, I would have been in charge of submitting the death certificate to the IRA bank, but each of the siblings handled their portion the way they wanted. Hope this helps.