ProGolferWannabe
Recycles dryer sheets
- Joined
- Jan 14, 2012
- Messages
- 141
I received what I thought was incorrect tax information regarding an inherited IRA. I plan on confirming this with a tax pro, but figured I would ask here and see if folks believe I am correct in my thinking.
Scenario:
Person A dies in early January 2021 and leaves the balance of a traditional IRA to Children B, C, and D. Each child gets 1/3 of the balance.
Person A did not take an RMD in 2021 and was required to do so.
WHAT I UNDERSTOOD TO BE TRUE: Children B, C, and D are required to take 1/3 of Person A's RMD (based upon Person A's life expectancy in 2021 per the IRS), and those distributions would be treated as taxable income (all contributions were pre-tax) on each of the children's respective 2021 tax returns.
WHAT I WAS TOLD: Children B, C, and D are required to take 1/3 of Person A's RMD (based upon Person A's life expectancy in 2021 per the IRS), and those distributions would be treated as taxable income (all contributions were pre-tax) on the final tax return of Person A for 2021.
Basically, it is a question of on what return the taxes are reported....the Parent's or the Children's.
As always, thanks.
Scenario:
Person A dies in early January 2021 and leaves the balance of a traditional IRA to Children B, C, and D. Each child gets 1/3 of the balance.
Person A did not take an RMD in 2021 and was required to do so.
WHAT I UNDERSTOOD TO BE TRUE: Children B, C, and D are required to take 1/3 of Person A's RMD (based upon Person A's life expectancy in 2021 per the IRS), and those distributions would be treated as taxable income (all contributions were pre-tax) on each of the children's respective 2021 tax returns.
WHAT I WAS TOLD: Children B, C, and D are required to take 1/3 of Person A's RMD (based upon Person A's life expectancy in 2021 per the IRS), and those distributions would be treated as taxable income (all contributions were pre-tax) on the final tax return of Person A for 2021.
Basically, it is a question of on what return the taxes are reported....the Parent's or the Children's.
As always, thanks.