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dwezdenko
New Member

Does the 10% early penalty apply if I take a 100% distribution for an inherited IRA?

 
3 Replies
ColeenD3
Expert Alumni

Does the 10% early penalty apply if I take a 100% distribution for an inherited IRA?

Yes.

If you are under 59½ you'll be subject to the same distribution rules as if the IRA had been yours originally, so you cannot take distributions other than RMD for the year of the death without paying the 10% early withdrawal penalty.

 

 

Those who qualify as individuals directly impacted by the pandemic will be able to withdraw up to $100k from their retirement accounts without facing the 10% early withdrawal penalty.

You qualify if:

  • You, your spouse, or your dependent are diagnosed with COVID-19
  • You experience adverse financial consequences as a result of being quarantined, furloughed, or laid off
  • You had work hours reduced to COVID-19
  • You’re unable to work due to child care closure or hour reduction

The distribution would be taxed over 2020, 2021, and 2022. You’ll have that time to pay back the funds you withdrew, without the amount impacting that year’s cap on contributions, and if you pay back the amount within that time, you’ll be able to claim a refund on those taxes.

 

 

fanfare
Level 15

Does the 10% early penalty apply if I take a 100% distribution for an inherited IRA?

NO NO NO.

there is never a 10% penalty on an Inherited IRA.

fanfare
Level 15

Does the 10% early penalty apply if I take a 100% distribution for an inherited IRA?

unless you elect to treat your spouse's IRA as your own, in which case it is no longer an Inherited IRA

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