2004 Regular IRA distribution and Inheritance


A

Audy [John 6:54]

Hi,

My dad died in 1994 and in that year my mother rolled over that IRA into her
name. For the last couple of years she has been receiving minimum
distributions from her IRA. TurboTax Premier is asking me if these
distributions are from an inherited IRA. I am not sure how to answer this
for the year 2004...

1) Is the answer "Yes" every year that she takes the distribution? or...

2) Would it have only been "Yes" one time and since then the answer would be
"No" since it was rolled into her name.

3) Whether I answer "Yes" or "No" it makes a noticeable difference in her
taxes and I don't quite understand why. If you can summarize that it would
be helpful also.

Thanks,

John653
 
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P

Paul

Audy said:
My dad died in 1994 and in that year my mother rolled over that IRA into
her
name. For the last couple of years she has been receiving minimum
distributions from her IRA. TurboTax Premier is asking me if these
distributions are from an inherited IRA. I am not sure how to answer this
for the year 2004...

1) Is the answer "Yes" every year that she takes the distribution? or...

The answer I believe the program is looking for is no. The Distribution
Code box on the 1099-R would be "4" if the distribution were due to death.
And that should tell the program that it is an inherited IRA, not subject to
any penalty.

2) Would it have only been "Yes" one time and since then the answer would
be
"No" since it was rolled into her name.

3) Whether I answer "Yes" or "No" it makes a noticeable difference in her
taxes and I don't quite understand why. If you can summarize that it would
be helpful also.

The tax implications of any distribution are the same, in that the
distribution is subject to regular tax rates regardless of where the IRA
came from. Being an inherited IRA only impacts the distributions.

It's possible that there is an age issue. How old is your mother? As the
age of the individual receiving the IRA distribution would trigger a penalty
tax (10%), exceptions for inherited IRA's.
 
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P

Phil Marti

Audy said:
My dad died in 1994 and in that year my mother rolled over that IRA into
her
name.
How that account was titled matters. Did she roll it into an IRA as the
beneficiary of your father's IRA, or did she just roll it into her own IRA?
If she did the latter, it's no longer an inherited IRA.
For the last couple of years she has been receiving minimum
distributions from her IRA. TurboTax Premier is asking me if these
distributions are from an inherited IRA. I am not sure how to answer this
for the year 2004
See above.
1) Is the answer "Yes" every year that she takes the distribution? or...
3) Whether I answer "Yes" or "No" it makes a noticeable difference in her
taxes and I don't quite understand why.
Post the line 15 numbers and the other lines (numbers and amounts) that
change.
 

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