Recently inherited Ira
Hello,
I inherited an IRA from my Dad, who was 74, in Feb. 2012 and am aware that I have to take his regular RMD by year end and I am also familiar with the RMD rules that apply to me as beneficiary. Here are my two questions however.
1) Since he won’t receive any income this year, can he take more than his RMD and have his income applied to his tax return since it will be at a much lower bracket than mine?
2) Can he still do a Roth conversion even though he is deceased?
Thank you,
Anthony
Permalink Submitted by Bruce Steiner on Tue, 2012-02-21 04:54
If he tries to take an additional distribution, we won’t know about it.
Similarly, if he tries to convert to a Roth, we won’t know about that either.
Permalink Submitted by Alan Spross on Tue, 2012-02-21 17:09
Sorry to hear of your loss.
Any taxable transactions after his death are taxable to you as the beneficiary, including the RMD that would have been required for 2012. Also, you cannot convert an inherited TIRA as a non spouse beneficiary. The 1099R reporting distributions will show your SSN on it.
Had your father converted amounts to a Roth IRA in 2011, the executor or personal rep could have that conversion recharacterized, but those people cannot pursue a new conversion.
You should check your father’s recent tax returns to determine if you inherited any basis in the IRA from non deductible contributions. Look for Form 8606. Any unrecovered basis you receive will reduce the taxable amount of your RMDs and other distributions.
Permalink Submitted by Alan Spross on Tue, 2012-02-21 20:07
Generally yes.
But if there are more than one primary beneficiary on the account, the disclaimant should check with the custodian’s legal staff to make sure there are no special provisions in the beneficiary clause that would affect where the disclaimed funds would go.