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Posted by / 07-Feb-2018 02:46

Liquidating ira

  With respect to a traditional IRA, if a portion of the funds are attributable to nondeductible contributions, they are not taxed.

Income Tax Consequences of Inheriting an IRA or 401(k) if You're Not a Surviving Spouse If you're not the surviving spouse of the IRA or 401(k) account owner, then the income tax consequences of inheriting the account will depend on what you choose to do with it: Estate Tax Consequences of Inheriting an IRA or 401(k) if You're Not a Surviving Spouse The entire fair market value of the IRA or 401(k) will be included in the value of the deceased owner's estate for estate tax purposes.And what if the beneficiary needs to take additional cash out of the account to pay their increased income tax bill?It will result in additional income taxes on the amount withdrawn.You may be able to deduct some or all of your traditional IRA contributions.The deductible amount could be reduced or eliminated if you or your spouse is already covered by a retirement plan at work.

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Thus, if all of the deceased owner's other assets combined with the value of the IRA or 401(k) exceed the current federal or state estate tax exemption, then the deceased owner's estate will owe estate taxes.