TAXES ON INHERITED IRA ACCOUNTS

Frank Zerjav, CPA

INTRODUCTION Serving the needs of clients located nationwide from it

offices in St. Louis County, Missouri, Frank L. Zerjav, Sr., CPA, leads Advisory Group Associates' Tax & Advisory firms. With extensive experience in strategic tax planning strategies, Frank L. Zerjav, Sr., CPA, is committed to ensuring that clients achieve their specific financial goals. 

One situation that comes up frequently is the inheritance of an individual retirement account (IRA) from a person who is not a spouse. In the case of inherited IRAs, contributions and rollovers from other IRAs are not permissible. 

TAXES There is the possibility of a trustee-to-trustee transfer of the

inherited funds, provided the deceased IRA owner set up the IRA into funds that can be moved on behalf of the same beneficiary. Complex rules govern distributions from inherited IRAs, so to avoid situations that conflict with federal regulations, it is wise to contact an experienced tax advisor. 

One general rule is that federal income taxes on inherited IRAs are not due until account distributions are received. Keep in mind that annual required minimum distribution rules may also apply to inherited assets held in both traditional and ROTH IRA inherited accounts. Contact a professional tax advisor when such events happen to avoid 50% penalties that could be asserted.