How do I figure out the taxable amount on two IRAs with my husband as beneficiary?

by John D. Rossi III, CPA | Apr 11, 2017

We live in Wisconsin, and I don’t know which worksheet I am supposed to use. My husband was the beneficiary for two IRAs (no basis) his father left to him. My husband is 52, and both his mother and father have died. Both IRAs’ 1099-Rs had the “2b” box checked (“Taxable amount not determined”). One was $33,200 and the other was $16,700. Federal and state taxes were taken out of the larger one. We don’t have any IRAs to roll them into, so we just cashed them in.

Your husband can only roll over an IRA from you. For anyone else it is considered "income in respect to a beneficiary" with a basis of zero. He has two options:

  1. Take it as a lump sum.
  2. Take it as a beneficial IRA (over time).  

The taxable amount (no penalty regardless of his age) is reported on Form 1099-R.  

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Answered by: John D. Rossi III, CPA, is president and CEO of JR3 Virtuoso Solutions Inc. in Northampton, Pa. He is also an associate accounting professor at Moravian College in Bethlehem, Pa.
The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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