@Anonymous_ wrote:
@jeanmissor wrote:
.......liquidated the IRA account and is sending me a check and preparing a K-1.
If you are getting a check and a K-1, then it is likely that the estate did not pay any tax that may have been due on the liquidation of the account.
A K-1 (1041) reports items of income (gain), deductions, and credits. As a result, if the estate had paid the tax due on the liquidation of the account (and there were no final deductions), then you would most likely just be receiving a check for your share of the assets (which is now cash).
This brings to mind one other possibility.
If the original IRA account owner is older than their "beginning year" (generally, age 70-72 depending on when they reached that age), they are required to take an RMD (required minimum distribution) every year based on the account size and life expectancy. If they die before taking their RMD, the beneficiary must take the RMD and pay tax on it before any remaining balance can be rolled over into a new inherited IRA.
So it is possible, that the executor only withdrew the RMD, and that is what will be reported as income on the K-1. Then, the remaining IRA balance is eligible for rollover into an inherited IRA with your preferred broker. (It's never really "your" IRA and must be kept in a separate account from your own IRAs, even though you can use the same broker or bank. "John Smith as beneficiary for Jane Doe's IRA" instead of "John Smith's IRA".)
Then you would be required to take an RMD (or more) starting in 2024, and withdraw all the money and close the account by 2033.
However, if the executor liquidated the entire IRA, the previous discussions apply.
