Inherited IRA / RMD exemption NY State

Forum|Forum|3 months ago
March 22, 2026
1 reply
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I and 3 other family members inherited an IRA from our non-spouse relative who passed in 2024, that year she had already taken her RMD before passing. We received the funds in 2025. Of the 4 recipients, 3 of us have received 18% of the IRA. I took my RMD in 2025, $8,000. As a New York State resident I am entitled to a portion of the $20,000 exemption my aunt received. Am I entitled to $5,000 exemption because 4 of us received the IRA or $3,600 as my portion was 18%? Additionally, when entering this for NY state, am I only editing the "Received retirement income" section with the decendent's information - (date of birth, total IRA and the full exclusion amount of $20,000 then noting my 18%)? Or is there somewhere else this should be noted? I didn't see return fluctuate from entering these details.

Opus 17

Level 15

New York says you divide by the number of beneficiaries even if the money is not divided evenly, so you can exclude up to $5000. But I don't know how to claim it in NY. You will have to enter the entire amount of the 1099-R and the adjustment will be somewhere in the New York section (assuming Turbotax even includes this adjustment).

daccitl

Level 2

I'm not sure Opus 17 is correct. NY's website, https://www.tax.ny.gov/pit/file/information_for_seniors.htm , under "Information for Retired Persons" --> "Tax Benefits" -->"New York State Subtraction Modifications" --> "Receiving distributions as a beneficiary" says: "If the deceased individual has more than one beneficiary, the $20,000 maximum amount of the pension and annuity exclusion must be allocated among the beneficiaries. Each beneficiary’s share of the $20,000 exclusion is determined by multiplying $20,000 by a fraction whose numerator is the value of the pensions and annuities inherited by the beneficiary, and whose denominator is the total value inherited by all beneficiaries of the deceased individual’s pensions and annuities. "

So you received 18% of the value of the IRA (which is the fraction described in the quote). Thus the maximum pension exclusion you can claim on your distribution (for any year you're taking a distribution) as your relative's beneficiary is $3,600. Note, your total pension exclusion remains $20,000, and is not increased to $23,600 (see example that NY gives).

Since I have not had to deal with a beneficiary situation, I'm not sure how to go through the TT screens. However, one of the screens I had to go through, "Where is your distribution from" is one that asks you to check whether the distribution is from a federal or state pension, or is "not eligible for exclusion for those over age 59 1/2", or "none of the above". TT is not very clear here, even when you read the "Learn More" information. Since the exclusion is based on the decedent's eligibility, I believe you DO NOT check the "not eligible" box, regardless of your age. Check your work by seeing whether the proper amount shows up as a subtraction on Line 29 of IT-201. Also make sure TT doesn't start assessing an "excess accumulation" penalty (for not taking enough RMD) on your federal return (there are other posts in TT Community about that!).

Opus 17

Level 15

@daccitl

The page you cite does indicate that. I found a page earlier today that seemed to offer a different answer, but it is in my work browser history, not at home, so I can't check at the present time.