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    CDJ5134's Avatar
    CDJ5134 Posts: 1, Reputation: 1
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    #1

    Mar 13, 2007, 04:17 AM
    Income Tax on IRA in Estate Distribution
    Summary: Man and wife (over 65) have property and funds, which include an IRA. Everything is willed to each other, and then to the adult children. Wife dies and before her will is probated, husband dies. Will(s) are finally probated and estate distributed. It is understood that no ESTATE taxes are due because amount is small. QUESTION: Do the adult children have to pay INCOME TAXES on their shares of the IRA since they were not "designated beneficiaries" of the IRA itself, but in the Will for an estate that INCLUDES an IRA?
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #2

    Mar 15, 2007, 11:13 AM
    ANY distribution from a traditional IRA is subject to income taxes paid by the recipient of the distribution, because the IRA was funded by pre-tax dollars.

    The money grew tax-deferred, NOT tax-free, so taxes must be paid when the money is withdrawn, regardless of who withdraws it!
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