Inherited IRA Distribution Best Option
Does cost basis matter when it comes to taking distributions from the Inherited IRA. I am unsure whether to take my distribution in cash or in-kind.
This IRA was rolled over from a 401k account that I inherited. I am aware that there are no RMDs just that the account needs to be empty after 10 years. I discussed my plan with my accountant on how much to take out yearly, but I was wondering if there were any other tax advantages I could be taking when performing the distribution.
Thank you
Permalink Submitted by Alan - IRA critic on Thu, 2021-11-18 16:27
Unless the inherited IRA has basis from after tax contributions that the decedent made, all your distributions will be fully taxable. Individual holdings in an IRA do not have individual cost bases, therefore it makes no difference whether you distribute cash or securities from the inherited IRA. It would take some research to determine whether you inherited any after tax amounts from the 401k – check the final 401k statement to see if there was any balance from after tax contributions.