Blog on Pro-Rata Rule clarification
I read this sentence from a Slott Blog, written by Andy Ives posted on Dec 17, on the Pro-Rata Rule and request clarification on its meaning.
“Inherited IRA accounts and Roth IRAs are not included when determining taxation on a distribution from a traditional IRA.”
Does this mean that a beneficiary, who inherits TIRAs with basis, isn’t required to file Form 8606 to determine what portion of his distribution is tax free and what portion is taxable to him?
I’m probably reading too much into this or reading it out of its intended context, but just in case I thought I’d ask the forum. Thank you so much for having this forum to ask questions and for the experts who so generously share their expertise with us. Frank.
Permalink Submitted by David Mertz on Tue, 2018-12-18 17:26
No, it means that inherited IRAs are not included on the Form 8606 used to determine the taxable amount of a distribution from the taxpayer’s own IRAs. If the inherited IRA had basis in nondeductible contributions, the taxable amount of a distribution from the inherited IRA would be calculated on a separate Form 8606 that includes only the IRAs that the beneficiary inherited from the particular deceased.