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Lev
Lev, Tax Advisor
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Tax treatment of 5-year withdrawals of disclaimed ira

Resolved Question:

Can I disclaim an inherited ira and let my college-age daughter withdraw the assets using the 5-year rule?  How do I report these withdrawals?  I am hoping that the withdrawals will be taxed at her lower rate.  Her earnings from her part-time job last year were less than $5,000.
Submitted: 3 years ago.
Category: Tax
Expert:  Lev replied 3 years ago.

LEV :

Hi and welcome to Just Answer!
You may disclaim any inherited asset including IRA account. If you do so - you will be treated as if you never were the designated beneficiary and would not need to report withdrawals.
All withdrawals will be included into taxable income of a new beneficiary
however you may not decide to whom that asset is passed. The successor beneficiary is determined by the Will or according to the state law.
If your daughter is not mentioned as the successor beneficiary on the IRA account - she likely will go through probate.
I suggest this article for additional information - http://www.investopedia.com/articles/retirement/03/041603.asp


 

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22991
Experience: Taxes, Immigration, Labor Relations
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Lev
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Taxes, Immigration, Labor Relations