Excess Accumulation Tax

Submitted by Dale Walters on Wed, 2017-10-18 18:22

TRA 86 imposed a tax on large IRAs by taxing distributions in excess of a certain amount at 15%.

There was a grandfather election that could be made. At death, the 15% would continue to apply.

The owner has died this year (2017). Though TRA 86 has been repealed, what happened to those that made the election and to those inheriting the IRA?



Submitted by Alan - IRA critic on Wed, 2017-10-18 18:43

TRA 1997 repealed the excess distributions tax for effective in 1997 and for beneficiaries of all deaths occurring after 12/31/1996. Of course, the 50% excess accumulation tax still applies for failing to meet RMD requirements.

Submitted by David Mertz on Wed, 2017-10-18 19:02

Perhaps there is some misunderstanding of what the 15% tax was.  I believe it was an excise tax applied in *addition* to ordinary income tax on the excess distribution and did not replace the ordinary income tax.  With the repeal of this section of the tax code, this 15% excise tax no longer applies to any distributions.

Add new comment

Log in or register to post comments