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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 7197
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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My mother inlaw was the beneficiary on her deceased husbands

Customer Question

My mother inlaw was the beneficiary on her deceased husbands ira. He was 72 at the time of his death. He passed 2 years ago. In 2015 she cashed in the ira and did not roll it over. She is was 69 years old at the time. I told her that she had to pay taxes on the money since she did not roll over into her own ira and wait until she was 70 1/2. She was told she did not have to pay taxes on the money. The distribution code on the 1099 is 4 and the ira/sep/simple box is checked. The taxable amount in box 2a is the same as the distribution amount. Is she taxed on this distribution.
Submitted: 1 year ago.
Category: Tax
Expert:  Stephen G. replied 1 year ago.
Yes.Unless the IRA was changed to an IRA which shows "deceased" with the name of the original participant's name in the the title of the IRA. However, if that were the case there should be no taxable amount; code 4 indicates a payment to a beneficiary exempt from the early withdrawal penalty due to death of the participant.I'm afraid it's taxable just as you told here it would be.
Customer: replied 1 year ago.
The 1099 has the owner (deceased), then her name (beneficiary), but it does have a taxable amount.Thank you
Expert:  Stephen G. replied 1 year ago.
Well, looks like it was changed over correctly, but then she took it out; did she take it all out?
Expert:  Stephen G. replied 1 year ago.
Please remember to rate my response as that is the only way we receive credit for our work.Thanks very much.Steve G.
Expert:  Stephen G. replied 1 year ago.
Just checking in..................Have you had a chance to review my response? Do you have any follow-up questions?If not, please remember to rate my response as that is the only way we receive credit for our share of any payment that you have already made.Thanks very much,Steve G.
Expert:  Stephen G. replied 1 year ago.
Just checking in..................Have you had a chance to review my response? Do you have any follow-up questions?If not, please remember to rate my response as that is the only way we receive credit for our share of any payment that you have already made.Thanks very much,Steve G.