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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 14098
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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my brother estate has 250,000 from his retirement. He passed

Resolved Question:

my brother estate has 250,000 from his retirement. He passed away 11 years ago and money came to me as Feduciary of his estate, this is the only item on his estate and there are only my sister and me as beneficiary. There is no state tax on this. question is what federal taxes needs to paid if any. Also when it is distributed to my sister and me , do we have to pay taxes on this as our income?
Submitted: 1 year ago.
Category: Finance
Expert:  Megan C replied 1 year ago.

MyVirtualCPA :

Hello, and welcome to JustAnswer.com

MyVirtualCPA :

What type of retirement account has the funds in it? Is it a traditional IRA or 401(k)?

MyVirtualCPA :

There is no federal estate tax on the retirement account, but if it was a traditional IRA or Traditional 401(k) then you and your sister would owe income tax when you withdraw from the IRA account

MyVirtualCPA :

https://www.fidelity.com/viewpoints/non-spouse-IRA

MyVirtualCPA :

There's a good link on what happens if you have an inherited IRA

Customer:

It was a retirementt account annuity and disability from TIAA which is an insurance company which invest for teachers, my brother was a professor at University.

MyVirtualCPA :

If this was a tax deferred account, then when you as the beneficiary withdraw the amount from the plan, you will be taxed ordinary income on the withdrawal

Customer:

I want to know what about the portion which is disability payment.Do we have to pay tax on that part too?

MyVirtualCPA :

It depends. Did your brother pay the premiums on this plan, or did his employer

Customer:

he paid a portion of premium.

MyVirtualCPA :

The portion that he paid, you would not pay tax on that amount

MyVirtualCPA :

You will have to get with TIAA and get the information on who paid what

MyVirtualCPA :

This is very complex. You may be well advised to seek the help of a local accountant to handle this for you. It's not a cut-and-dry answer

Customer:

Amazing that my accountant also can not give me a good clear answer. Is there any way I can ask IRS directly?

MyVirtualCPA :

You could certainly call 1-800-829-1040 and speak with an agent there

MyVirtualCPA :

But, in my experience the IRS is not very clear, either

MyVirtualCPA :

You have several issues going on. First, your brother passed 11 years ago and you are just now getting this income. That can complicate things. Second, you have both retirement and disability payouts in this amount. Third, your brother paid a portion of the premiums

MyVirtualCPA :

Is there anything else I can assist you with today?

MyVirtualCPA :

If not, please let me know if I have provided you with excellent service today

Customer:

thanks, XXXXX XXXXX

MyVirtualCPA :

Thank you. You can rate my response using the rating scale at the bottom of your screen

MyVirtualCPA :

Thanks again for using JustAnswer.com

Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 14098
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and other Finance Specialists are ready to help you
Expert:  Megan C replied 1 year ago.
Thanks, Customer for your positive rating. Please come back and visit MyVirtualCPA for any of your tax, finance, or social security needs. It was a pleasure working with you today.

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