Inherited IRA’s and Aggregation Rules
When doing a roth conversion, is an Inherited IRA (not from spouse) included in the aggregation rule to figure the pro-rata tax free conversion? Please Explain.
When doing a roth conversion, is an Inherited IRA (not from spouse) included in the aggregation rule to figure the pro-rata tax free conversion? Please Explain.
Permalink Submitted by Alan - IRA critic on Thu, 2017-08-03 20:40
No, inherited IRAs are never included in the calculations to determine the taxable amount for owned IRA distributions and conversions. Of course, an inherited IRA is subject to RMDs and the beneficiary may have inherited IRA basis from the decedent for the inherited IRA. If so, that basis applies only to the inherited IRA distributions, and basis in beneficiary’s own IRAs are kept totally separate. If both have basis a separate Form 8606 would be filed to report distributions from the owned IRAs vs. those from the inherited IRA.