It depends. As a general rule, withdrawals taken from a Traditional IRA that have been inherited are only subject to the early withdrawal penalty if the funds from the deceased's IRA are transferred directly into the beneficiary's own IRA. Early withdrawal penalties never apply to lump sum distributions or withdrawals from "Inherited IRAs."
IRA with basis.
If you inherit a traditional IRA from a person who had a basis in the IRA because of nondeductible contributions, that basis remains with the IRA.
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