Inherited IRA – desired withdrawal missed for 2022 – makeup?
My mother in law died in 10/22. Broker delays, was not able to create inherited IRA’s for my children until early 2023. Max unearned income for dependents for 2022 to avoid tax is $2,300.
Is there any way to ‘fix’ the late creation of the inherited IRAs with IRS form 5329 (or any other form), and do a retroactive withdrawal for 2022?
Permalink Submitted by Alan - IRA critic on Fri, 2023-01-13 23:21
If you are referring to completion of the year of death RMD for MIL, the beneficiaries now have until the 2022 tax due date including extensions for completing that RMD. If so, no 5329 is needed. Not sure if this answers your question, but if an inherited IRA distribution was desired in 2022, there is no way to create one now. Distributions are taxable in the year distributed, per Form 1099R.
Permalink Submitted by Steven Camhi on Fri, 2023-01-13 23:26
This was not for an RMD for my MIL, was for an inherited IRA distribution for 2022. Obviously not happy with that fact, but happy you gave me the answer! Thanks!
Permalink Submitted by Jay Wiedwald on Sat, 2023-01-14 19:04
$2,300 is the unearned income threshold for Kiddie tax for a child dependent. But $1,150 is the threshold for a filing requirement and a tax liability.EDIT: Those are tax year 2022 numbers, 2023 will be slightly higher.