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Financial Planning / Tax Strategies
|Subject: Re: Tax on inherited IRA||Date: 2/21/2013 5:11 PM|
|Author: vkg||Number: 117837 of 122470|
A pal of mine is freaking out about a 1099-R he got. He inherited an IRA and his understanding is that inheritance is not taxable until you get to mega-amounts, which I believe is true. The amount is $91K.
He is confusing estate and income taxes.
Estate's must exceed a specific size (depending on the tax year and previous gifts) before estate taxes are due. It is independent of how much a single individual inherits.
Most inherited assets receive a new basis. The new basis could be higher or lower than the cost.
An inherited IRA does not receive a stepped up basis. Most contributions to a traditional IRA are pre-tax. It isn't likely, but he could ask the executor if there were after tax contributions to the IRA. The IRA administrator does not have that information.
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