topic IRA Beneficiary question in Get your taxes done using TurboTax

IRA Beneficiary question

elmo039 — Wed, 30 Oct 2024 16:06:51 GMT

Does an IRA that has been paid taxes at disbursement to the beneficiary claimed on taxes? Does a 1099 come for IRA when someone is a beneficiary?

Re: IRA Beneficiary question

dev145 — Wed, 30 Oct 2024 16:19:26 GMT

Hello elmo039,

Yes, if there was a distribution form IRA account to the beneficiary, beneficiary will receive 1099-R that s/he need to report on the tax return. 1099-R will have distribution amount and taxes paid to the agency that will be reported on the tax return.

Thanks for participating in TurboTax's Ask the Expert event today. I hope this information was helpful!

Re: IRA Beneficiary question

Andrew_W — Wed, 30 Oct 2024 16:22:35 GMT

Hi elmo039,

For inherited retirement accounts, the beneficiary will typically receive a 1099-R form. If the inherited account was a pre-tax/traditional account, the distributions will generally be considered ordinary income to the beneficiary, and are taxable. If there are tax withholdings on the distribution, they will be indicated on the 1099-R and will join the beneficiary's other tax withholdings from other sources.

This TurboTax Help article discusses these scenarios: Is an inherited IRA or retirement plan taxable?

Re: IRA Beneficiary question

elmo039 — Wed, 30 Oct 2024 16:23:26 GMT

Are you saying that taxes have to be paid twice? The beneficiary is having taxes taken out of the account balance and then when taxes are filed they have to be paid again?

Re: IRA Beneficiary question

dev145 — Wed, 30 Oct 2024 17:15:50 GMT

No, taxes will not be paid twice. Like other expert said, your 1099-R will have tax withheld reported (just like W2) that you will report on your tax return. But if taxes withheld were not enough then you might have to pay the difference. For example, your tax rate is 24% but tax withheld was only 20% then you have to pay that 4% difference. Company that holds IRA account do not know your total income so they will withheld certain amount but it might not be enough depending on your overall tax rate.