A:

The basis attributed to IRA assets that you inherited remains the same. Since you are a spouse beneficiary and you elect to treat the assets as your own by transferring them to your own IRA, the basis is now treated as if you made the non-deductible contribution. Going forward, you should file Form 8606 to determine the taxable portion of distributions you receive from any of your Traditional IRAs. If you also made non-deductible contributions to your IRA, the basis from the inherited assets should be combined with your basis.



This question was answered by Denise Appleby
(
Contact Denise)



RELATED FAQS
  1. I make over $100,000/yr and my adjusted gross income precludes standard IRA contributions. ...

    With an adjusted gross income (AGI) of more than $100,000, only your eligibility to deduct contributions to a Traditional ... Read Answer >>
  2. Does the $20,000 distribution count as taxable income?

    I contributed 5500 for myself and my wife for the last two years to a traditional IRA. I didn't get the tax benefit because ... Read Answer >>
  3. Upon my death, will the beneficiaries of my IRA be compelled to take the entire amount ...

    It depends. If the beneficiary of your IRA is your spouse, he or she will be eligible to transfer the amount to his or her ... Read Answer >>
  4. Do I have to pay taxes on money that I took out of an IRA account?

  5. My mother inherited my father's IRA. When she died, I received an account application ...

    If your brother cannot be found, you may want to check with the IRA custodian and/or the financial advisor to find out if ... Read Answer >>
  6. Can I convert non-deductible contributions made to my Traditional IRA to a Roth IRA ...

    You can convert the contributions to a Roth IRA; however, a portion of the amount you convert to the Roth will be subject ... Read Answer >>
Related Articles
  1. Savings

    How To Convert A Non-Deductible IRA Into A Roth IRA

    Here's a step-by-step guide for transferring one retirement plan into another.
  2. Retirement

    5 Secrets You Didn't Know About Traditional IRAs

    A traditional IRA gives you a current-year tax benefit and future years of tax savings – minus the income restrictions that limit who can have a Roth IRA.
  3. Retirement

    Top 10 Mistakes To Avoid On Your IRA

    IRA rules are complicated. It's easy to make mistakes – and they can cost you big time.
  4. Financial Advisors

    IRA Holders Face New Rules in 2015

    New rules for IRA holders mean less loopholes in 2015.
  5. Retirement

    Don't Make These Top 10 Mistakes On Your Roth IRA

    Don't lose out on the benefits of a Roth by contributing too much, breaking rollover rules or making other avoidable errors.
  6. Retirement

    Inheriting an IRA: Tax Rules You Should Know

    Don’t get hit with a 50% penalty because you don’t know the required minimum distribution (RMD) rules for IRA beneficiaries.
  7. Products and Investments

    7 Top IRA Strategies for Your Clients

    With IRA season in full swing, advisors should consider these seven strategies for clients.
  8. Taxes

    Avoiding "Prohibited Transactions" In Your IRA

    To avoid jeopardizing your IRA assets, find out what transactions are prohibited.
  9. Taxes

    How To Use Your IRA As A Last-Minute Tax Deduction

    While some people are stressing over their taxes, there is a big advantage to delaying the process: You can maximize your 2014 contributions to your IRA.
  10. Retirement

    How (And Why) To Open an IRA Now

    Take these simple steps to set up an Individual Retirement Account that will save you tax money and set you up for the future.
RELATED TERMS
  1. Form 8606

    A tax form distributed by the Internal Revenue Service (IRS) ...
  2. Extended IRA

    An IRA that allows a second generation beneficiary to continue ...
  3. Traditional IRA

    An individual retirement account (IRA) that allows individuals ...
  4. IRS Publication 590: Individual Retirement Arrangements (IRAs)

    A document published by the Internal Revenue Service (IRS) that ...
  5. Inherited IRA

    An individual retirement account that is left to a beneficiary ...
  6. IRA Transfer

    The transfer of funds from an Individual Retirement Account (IRA) ...
Trading Center