Typically distributions out of retirement accounts of any kind ARE taxable unless there's "basis" in the account - in which case some of the distribution would not be taxable - or the distribution is out of a Roth IRA. Do you know the reasoning behind the brokerage firm's statement?
What code is in box 7?
Is the IRA/SEP/SIMPLE box checked?
I'm looking at my notes. I think that, in my grief, the fact there would be no 10% Penalty for early withdrawal* from this inherited account, I confused with the tax issue. Obviously they are quite different issues. *I am 56 y/o.
There is never any early withdrawal penalty on an inherited IRA. It code 4 should prevent any penalty.
Sorry if I wasn't clear. My question was never about the penalty. It was about whether the inherited funds were taxable after my husband died. It appears they are. Thanks.