Some articles say only the original Roth IRA account has to have been 5 years or older for withdrawals by a beneficiary to be tax free. But some seem to indicate the Inherited Roth IRA account the beneficiary opens to hold the money has to be 5 years old. The Roth IRA I inherited was more than 5 years old at time of passing. However my brokerage managing the inherited Roth IRA entered a "T" for box 7 on my 1099-R and not a "Q" for qualified distribution which added the full taxes on it. Do I have to pay any taxes on distributions from the Inherited Roth IRA account holding the money or do I have to wait 5 years myself also? Why do you think the brokerage entered "T" instead of "Q"?
No you won’t owe any taxes. A lot of times distribution code T is used when the custodian don’t know 100% that a distribution is qualified. Usually this can be fixed by your tax preparer knowing the situation and being able to count those distributions as qualified on your taxes.
@@blueridgewealth How would you report the distribution as non-taxable using the T code on my taxes? Do you need to use an 8606? Why did the IRS help line tell me I have to calculate basis on an 8606 even though the distributions should be qualified with the original Roth having existed well over 5 years?
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Some articles say only the original Roth IRA account has to have been 5 years or older for withdrawals by a beneficiary to be tax free. But some seem to indicate the Inherited Roth IRA account the beneficiary opens to hold the money has to be 5 years old. The Roth IRA I inherited was more than 5 years old at time of passing.
However my brokerage managing the inherited Roth IRA entered a "T" for box 7 on my 1099-R and not a "Q" for qualified distribution which added the full taxes on it.
Do I have to pay any taxes on distributions from the Inherited Roth IRA account holding the money or do I have to wait 5 years myself also?
Why do you think the brokerage entered "T" instead of "Q"?
No you won’t owe any taxes. A lot of times distribution code T is used when the custodian don’t know 100% that a distribution is qualified. Usually this can be fixed by your tax preparer knowing the situation and being able to count those distributions as qualified on your taxes.
@@blueridgewealth How would you report the distribution as non-taxable using the T code on my taxes? Do you need to use an 8606? Why did the IRS help line tell me I have to calculate basis on an 8606 even though the distributions should be qualified with the original Roth having existed well over 5 years?