IRA beneficiary Tax
Dear Sir,
1. Where do I see answers to my questions- My e mail “[email protected]”
2. I heard from Bank that IF beneficiary to IRA is non spouse (like children), than the balance at death in IRA is still counted towards
Total Estate and Estate tax is still due based on Total estate, Income tax on IRA is passed on as Child withdraws.
Can you be more specific bygiving an example of say $100,000 in IRA w/child as beneficiary assuming total estate is more than exwemption
allowed. I heard on WTTW that IT escapes Estate andEstate Tax. so I bought the complete package but there is no specific mention in it.
3. Is 403B plan is same as IRA bur 457B is not- all $$$ in 457B is taxed at death like Income tax and also part of Estate?
Raj Mody
630 918 8684
Permalink Submitted by Alan Spross on Tue, 2010-02-02 03:57
All retirement accounts of a decedent are included in the gross estate, although there is a deduction for any amount left to a charity. The estate tax is temporarily suspended, but Congress will probably eventually get around to restoring it with a unified credit of 3.5 million or perhaps more. Usually, the estate tax is paid from the decedent’s probate assets, but if there are not enough assets there, the IRAs may have to be tapped to pay estate tax. There is also a state inheritance or estate tax in some states.
Otherwise, the beneficiaries pay the income tax as distributions are taken out, either RMDs or other distributions. There may be a deduction against the beneficiary’s income tax for the amount of estate tax allocated to the IRA they inherited. This is known as the IRD deduction (Income with respect to a decedent).
403b, 457, 401k, IRA are all treated the same with respect to the above points.
Not sure what package you are referring to, hopefully not one of those free lunch seminar deals………….
Permalink Submitted by Bruce Steiner on Tue, 2010-02-02 15:00
If you went to the seminar for the free lunch, and you bought the annuity, the living trust, the timeshare, or the bridge, not only did you pay for your free lunch, but you also bought lunch for everyone else in the room.