Estate distribution
How does a beneficiary report an inherited IRA distribution on their 1040? Grandma left money to her 2 children and 6 grandchildren through her estate. The estate moved the money to an Inherited IRA. The Executor then distributed the money to all 8 beneficiaries. As the executor, I need to provide K-1s to each one. The internet says each beneficiary needs to report the distribution as income on their 1040, but how? Is it Wages? Interest? Dividends? Cap gains? The original money was held in a Traditional IRA as stocks and bonds, then cashed out. The cash has been fully distributed.
Permalink Submitted by Alan - IRA critic on Fri, 2021-01-15 21:16
The distribution portion for each K 1 goes on line 5 of the K 1. The beneficiary then reports this distribution on line 33 Col f of Sch E. From there to Sch 1, line 5, and the Sch 1 total goes on Form 1040, line 8, all the above which never once mention retirement accounts or IRAs. Mid 20th century design at best.