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garytshea
New Member

Inherited IRA distribution

Having received a distribution from an inherited IRA, it is added to one's income and taxed accordingly. The notification is by a Form 1099-R indicating distribution as a “death distribution” – i.e. code 4 in box 7 has been applied.  Question: this amount is unrelated to any traditional IRA contributions made the same year?

6 Replies
Critter
Level 15

Inherited IRA distribution

Question: this amount is unrelated to any traditional IRA contributions made the same year?

Correct ... they are totally separate situations and do not negate each other ... however you must have other qualifying income to make the IRA contribution allowable. 

garytshea
New Member

Inherited IRA distribution

Critter#2 can you expand on your however perhaps though a scenario?  TY.
Critter
Level 15

Inherited IRA distribution

Yes ... say your only income is the distribution then you could not make an IRA contribution because it was not earned income.

You must have earned income from wages or self employment to make a qualified IRA contribution.
garytshea
New Member

Inherited IRA distribution

Okay, got it.  Do you think a state income tax refund qualifies as earned income? It seems not to be mentioned in the IRS publications.
Critter
Level 15

Inherited IRA distribution

NO it does not.
dmertz
Level 15

Inherited IRA distribution

Earned income (compensation) generally comes from net profit from self employment or is compensation reported in box 1 of a W-2 (minus any amount in box 11).  A few other things qualify as compensation such as alimony:
<a rel="nofollow" target="_blank" href="https://www.irs.gov/publications/p590a#en_US_2016_publink1000230355">https://www.irs.gov/publication...>
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