So given I have traditional IRAs, Roth IRAs and now an inherited IRA, I have to figure out somehow how much of this is taxable? And will that percentage change as I continue to add money to IRAs? The IRS won't just accept our considering the RMDs from the inherited IRA as fully taxable?Let's take a deep breath. Now, calmly, separate all these into inherited in one pile and non-inherited in the other. During everything that follows, we're dealing only with the inherited. If I understand your situation, these are the only things you're receiving distributions from. Your other accounts are totally separate and don't affect any of this.On your 2012 Form 8606 you deal with establishing the after-tax "basis" of your inherited IRA. In doing so you combine all of the inherited IRAs, regardless of how many accounts there are. As I understand it, you rolled the one inherited annuity into an inherited IRA, so the only thing we're talking about at this point is inherited IRAs.You cannot make contributions to inherited IRAs. You can move/consolidate accounts, but always making sure that they're properly titled as inherited with a reference to the decedent. Each year your RMD is based on the prior year's ending balance and your age at the end of the current year. You may take the RMD from any account or combination of accounts you please. Each year you will complete Form 8606, Part I to determine the taxable amount of the distribution.I hope this clears it up for you, but holler back if not, and especially if I've made any incorrect assumptions.PhilRule Your Retirement Home Fool
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