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What type of retirement account has the funds in it? Is it a traditional IRA or 401(k)?
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
There's a good link on what happens if you have an inherited IRA
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.
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
I want to know what about the portion which is disability payment.Do we have to pay tax on that part too?
It depends. Did your brother pay the premiums on this plan, or did his employer
he paid a portion of premium.
The portion that he paid, you would not pay tax on that amount
You will have to get with TIAA and get the information on who paid what
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
Amazing that my accountant also can not give me a good clear answer. Is there any way I can ask IRS directly?
You could certainly call 1-800-829-1040 and speak with an agent there
But, in my experience the IRS is not very clear, either
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
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