Finding basis of inherited IRA
sac...@my-deja.com
How would I find out the basis of an inherited (traditional)
IRA? My Dad passed away a few years ago, and my Mom
inherited his IRAs, but we don't know what the contributions
were to calculate the basis. I couldn't find too much
paperwork on the IRAs, so I'm not sure where to get this
info.
Thanks for your help,
Sachin
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David Woods EA MST
> IRA? My Dad passed away a few years ago, and my Mom
> inherited his IRAs, but we don't know what the contributions
> were to calculate the basis. I couldn't find too much
> paperwork on the IRAs, so I'm not sure where to get this
> info.
You would have to dig through the tax returns to find an
8606 somewhere telling you the basis. Don't be surprised to
find that there may be little or none.
David M. Woods, EA, MST
(617) 723-2422
Boston, MA
www.rytercpa.com
Thomas E. Healy
> IRA? My Dad passed away a few years ago, and my Mom
> inherited his IRAs, but we don't know what the contributions
> were to calculate the basis. I couldn't find too much
> paperwork on the IRAs, so I'm not sure where to get this
> info.
The only way to find out would be to go through his old tax
returns to see if there are any 8606 forms. In the absence
of those, the basis would be zero.
Tom
--Solving your tax and business problems with
Professional Service...Personal Attention
Email: THea...@aol.com
Web: http://members.aol.com/thealycpa/Tom_Healy_CPA.html
Vida Freeman
> How would I find out the basis of an inherited (traditional)
> IRA? My Dad passed away a few years ago, and my Mom
> inherited his IRAs, but we don't know what the contributions
> were to calculate the basis. I couldn't find too much
> paperwork on the IRAs, so I'm not sure where to get this
> info.
He only had basis if he had NON-deductible contributions to
the IRA. The only way you could find that out is by
reviewing his tax returns. For Federal basis there should
have been a 8606 attached showing any non-deductible
contributions. If there were additional non-deductible
contributions for the state, it may be trickier to find the
information. (For example, my state, California, had
different rules for IRA contributions from 1982-1986. So
often taxpayers have additional basis for their California
tax returns.)
Vida Freeman, EA
TexTax2
> were to calculate the basis. I couldn't find too much
> paperwork on the IRAs, so I'm not sure where to get this
> info.
It is not necessary to determine the basis because the
entire IRA is taxable. She can either roll his IRAs over
into one of hers or can leave the funds in your father's
name and begin distributions when your father would have
reached age 70 1/2.
Hank Sievers
David Woods EA MST
>> were to calculate the basis. I couldn't find too much
>> paperwork on the IRAs, so I'm not sure where to get this
>> info.
> It is not necessary to determine the basis because the
> entire IRA is taxable.
You don't know that. And neither did the poster, since she
obviously felt that there was some basis in there.
David M. Woods, EA, MST
(617) 723-2422
Boston, MA
www.rytercpa.com
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Paul Maffia
>> nherited his IRAs, but we don't know what the contributions
>> were to calculate the basis. I couldn't find too much
>> paperwork on the IRAs, so I'm not sure where to get this
>> info.
> It is not necessary to determine the basis because the
> entire IRA is taxable. She can either roll his IRAs over
> into one of hers or can leave the funds in your father's
> name and begin distributions when your father would have
> reached age 70 1/2.
A totaly incorrect answer. It is absolutely necessary to
determine if there is a basis in the IRA. Basis is the total
of non-deductible contributions made.
By "she" I presume your mean the surviving spouse. In that
case, your second sentence is correct.
But your third sentence is total nonsense. If the surviving
spouse does not convert the IRA into her own, she must begin
distribtuions immediately. And how fast they must come out
would depend on the status of the IRA while the owner was
alive, i.e. if manadatory withdrawals had begun or not and
what withdrawal method was being used, straight life or
recalc.
--
Paul M.
D. Stussy
> How would I find out the basis of an inherited (traditional)
> IRA? My Dad passed away a few years ago, and my Mom
> inherited his IRAs, but we don't know what the contributions
> were to calculate the basis. I couldn't find too much
> paperwork on the IRAs, so I'm not sure where to get this
> info.
From his last income tax return. Form 8606, if present,
will tell you. Otherwise, the amount of his basis, as he
reported it to the IRS, was zero.
Vida Freeman
>> entire IRA is taxable. She can either roll his IRAs over
>> into one of hers or can leave the funds in your father's
>> name and begin distributions when your father would have
>> reached age 70 1/2.
> A totaly incorrect answer. It is absolutely necessary to
> determine if there is a basis in the IRA. Basis is the total
> of non-deductible contributions made.
>
> By "she" I presume your mean the surviving spouse. In that
> case, your second sentence is correct.
>
> But your third sentence is total nonsense. If the surviving
> spouse does not convert the IRA into her own, she must begin
> distribtuions immediately. And how fast they must come out
> would depend on the status of the IRA while the owner was
> alive, i.e. if manadatory withdrawals had begun or not and
> what withdrawal method was being used, straight life or
> recalc.
No, Paul, I am afraid you are wrong in your last paragraph.
There are special rules for spouses. A spouse who chooses
not to treat the IRA as his or her own CAN, in fact, wait
until the decedent would have been 70 1/2 to start taking
withdrawals. See below (directly from the Pub. on IRAs):
Owner dies before distributions have begun. If the owner
dies before distributions that satisfy the minimum
distribution requirements have begun, the entire interest
must be distributed under one of the following two rules.
Rule 1. By December 31 of the fifth year following the year
of the owner's death.
Rule 2. Over the life of the designated beneficiary or over
a period not extending beyond the life expectancy of the
designated beneficiary. See
Table 1 (Single Life Expectancy) in Appendix E.
The terms of the traditional IRA can specify whether rule 1
or 2 applies, or they can permit either the owner or
beneficiary to choose which rule applies. If the owner or
beneficiary can choose which rule applies, the choice must
generally be made by December 31 of the year following the
year of the owner's death. This is because distributions
generally must begin under rule 2 by that date.
Under rule 2, at least a minimum amount must be distributed
each year. No rule specified or chosen. If no rule has been
specified or chosen, distribution must be made under rule 2
if the beneficiary is the surviving spouse (and he or she
did not choose to treat the traditional IRA as his or her
own), or under rule 1 if the beneficiary is not the
surviving spouse. Rule 2 picked and spouse is not the
beneficiary. If rule 2 has been specified or chosen and the
beneficiary is not the surviving spouse, distribution must
begin by December 31 of the year following the year of the
owner's death.
Rule 2 picked and spouse is the beneficiary. If rule 2 has
been specified or chosen and the beneficiary is the
surviving spouse (and he or she did not choose to treat the
IRA as his or her own), distribution must begin by the LATER
of the following two dates.
. December 31 of the year the IRA owner would have reached age 70 1/2.
. December 31 of the year following the year of the owner's death.
Vida Freeman, EA
Art Kamlet
>> How would I find out the basis of an inherited (traditional)
>> IRA? My Dad passed away a few years ago, and my Mom
>> inherited his IRAs, but we don't know what the contributions
>> were to calculate the basis. I couldn't find too much
>> paperwork on the IRAs, so I'm not sure where to get this
>> info.
> From his last income tax return. Form 8606, if present,
> will tell you. Otherwise, the amount of his basis, as he
> reported it to the IRS, was zero.
The problem is when an 8606 is filed one year, and not filed
for later years because there were no non-deductible
contributions those later years. So even checking back the
last 3-5 years and finding no 8606s does not mean there is
no basis.
It would be nice if an 8606 was filed each succeeding year,
but there is no requirement to do so. = P&M =
--
Art Kamlet Columbus, Ohio kam...@infinet.com
Hank Sievers
non-deductible contributions, there would be some basis.
The IRA trustee needs to be contacted to get the basis
information.
Hank Sievers
Thomas E. Healy
> non-deductible contributions, there would be some basis.
> The IRA trustee needs to be contacted to get the basis
> information.
The trustee doesn't know. The only source is the
contributor's Forms 8606 on prior returns.
Tom
--Solving your tax and business problems with
Professional Service...Personal Attention
Email: THea...@aol.com
Web: http://members.aol.com/thealycpa/Tom_Healy_CPA.html
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