IRA Beneficiary question

Forum|Forum|1 year ago
October 30, 2024
2 replies
1 view

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?

dev145

Employee Tax Expert

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.

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elmo039Author

Level 2

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?

dev145

Employee Tax Expert

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.

Andrew_W

Employee Tax Expert

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?

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