Inherited IRA (beneficiary from Puerto Rico)
Good Morning,
I have what seems like a straight-forward two-part questions
1. Can an IRA inherited (non-spouse) by a Puerto Rican citizen be “stretched”?
2. How is the beneficiary taxed? My understanding is although Puerto Rico is a U.S Territory they have their own tax code.
Thank you and happy holidays!
Permalink Submitted by Jose Morales on Mon, 2014-12-22 17:04
A non-spouse beneficiary will have all of the same distribution options, regardless of residency/citizenship. The options for a non-spouse beneficiary are going to be dependent on the age of the IRA owner at the time of death.The distributions to the beneficiary will be reported on a 1099-R regardless of residency/citizenship. From my limited understanding of Puerto Rican tax law, federal taxes aren’t required to be filed for Puerto Rican source income but are required for income from outside of Puerto Rico. My guess is that distributions from the IRA will be considered non-Puerto Rican source income and be subject to tax reporting.