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padaniels
New Member

Is a RMD taxable is it was transferred to our Resource Management Account?

My husband has an inherited IRA from his mother and we received a RMD for 2016. The entire amount was transferred to the Resource Management Account. Is this amount taxable and are we correct is stating we received the entire amount for 2016?
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MaryK1
Level 9

Is a RMD taxable is it was transferred to our Resource Management Account?

An inherited IRA is taxed to the recipient as if it would have been taxable to the decedent.  With a traditional IRA, the taxpayer gets a deduction when the contribution is made and pays tax when they receive it. (If it were a ROTH you would NOT pay tax)  The RMD of the decedent also applies.  If you transferred the entire amount, you did receive the RMD because the RMD is the minimum amount.  The IRS does not allow tax free rollovers for inherited IRAs unless the recipient is the decedent's spouse. 

If it were your own IRA, you would have to pay an additional penalty if you withdrew it before retirement if an exception does not apply, because it is inherited, the Box 7 Code 4 Death does not apply the additional penalty.

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MaryK1
Level 9

Is a RMD taxable is it was transferred to our Resource Management Account?

An inherited IRA is taxed to the recipient as if it would have been taxable to the decedent.  With a traditional IRA, the taxpayer gets a deduction when the contribution is made and pays tax when they receive it. (If it were a ROTH you would NOT pay tax)  The RMD of the decedent also applies.  If you transferred the entire amount, you did receive the RMD because the RMD is the minimum amount.  The IRS does not allow tax free rollovers for inherited IRAs unless the recipient is the decedent's spouse. 

If it were your own IRA, you would have to pay an additional penalty if you withdrew it before retirement if an exception does not apply, because it is inherited, the Box 7 Code 4 Death does not apply the additional penalty.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

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