My husband inherited his mother's Roth IRA with his brother. How do I calculate the taxable amount. She did a one time contribution of $5,500 to the account in 2013.

[jaf0411]

My husband and his brother split the inheritance equally. How do I calculate the taxable amount and figure out the taxable amount, should I enter the total amount of $5,500 or just the amount my husband inherited?

[levisncap89 · Accepted solution]

Lump sum distributions from inherited ROTH IRA's are not taxable provided the five tax year rule is satisfied. For tax year purposes, IRS treats contributions to ROTH IRA's as having been made on January 1 of the tax year in which the contribution was made.

When did she actually fund the account? i.e. what date, and when did you take the distribution?

[jaf0411]

Thank you for your help. She funded the account 11/21/2013 and we took the distribution middle of this year, not sure of the exact date, so it's under 5 years. We received $2,862.66, of the distribution and his brother received the other half, same amount, So total earnings of the $5,500 contribution are $225.32. Would we take half of that and add the 10% penalty for our tax portion?

[jaf0411]

Also, we would have been 60 in April of 2017. Not sure if that makes a difference.

[jaf0411]

Great, thank you so much! You have been a huge help!

[levisncap89]

No problem. Glad to be of help, and condolences on your loss.

[jaf0411]

Thank you!

[levisncap89]

That would make the earliest withdrawal date for the earnings to be tax free January 1, 2018. Your age is honestly immaterial to that. I would have advised you to leave the earnings portion in there and withdraw it after the first of this year to avoid taxes, but no worry. It's a tiny amount. Your math is correct - $112.66 of your distribution is taxable. The 10% penalty generally does not apply to post-death distributions. I wouldn't worry about that.