Which state to report inherited IRA when part year resident in two states?

[rajcmj0918]

2021 was an unusual year.  I retired in May, and we moved from KS to OK in July. After moving to OK, I received distribution from an inherited Roth IRA and an inherited traditional IRA, both from my mother who passed away in early 2021.   Only the interest on the Roth IRA that my mother earned would be taxable (correct?), while the traditional IRA would be fully taxable.  My main question is: which state should be the "income source" of these IRAs?  If we had not moved to another state, it would be much easier to figure out. Thank you.

[dmertz]

This is Oklahoma income because you received the distributions while you were an Oklahoma resident.

[RaifH · Accepted solution]

You would include the distributions on your Oklahoma income. The retirement distributions are sourced to the state that you were a resident of when you received the distribution.

And yes, the Roth should not be taxable and probably has Codes 4 and B. There is an exception if the account was not open for five years prior to your mother's passing. The other IRA is taxable in its entirety unless there were any nondeductible contributions that your mother tracked, which is unusual. 

[dmertz]

Codes 4 and B do not apply to Roth IRAs, only to designated Roth accounts in a qualified retirement plan like a 401(k).  The distribution from an inherited Roth IRA will have code T or code Q and will only be taxable if the distribution is a nonqualified distribution and includes earnings.  Earnings come out last.

[rajcmj0918]

Thank you for your response ... that's what I thought, but wanted to be sure!