Should a merger of an Inherited IRA into a Traditional IRA result in taxable income in the amount of the Inherited IRA?

Forum|Forum|1 year ago
March 28, 2025
3 replies
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My 1099-R shows the entire amount of the Inherited IRA to be taxable income.

Best answer by Opus 17

You can't "merge" an inherited IRA into an IRA of your own.

If you are the spouse of the deceased, you have three choices.

1. Keep the IRA as an "inherited IRA" with its own separate rules.

2. Assume ownership of the IRA in your own name but keep it as a separate account.

3. Rollover the IRA into an IRA in your own name.

Maybe you did a rollover, and are calling it a "merge." In that case, after you enter the 1099-R from the IRA, there are some check boxes for different situations, answer that you did a rollover.

If you are any other relationship to the deceased owner, you can't merge, rollover, or convert the IRA into an IRA in your name. You might have tried to do that by withdrawing all the money, and contributing it to a new IRA in your name. If you did that, you have to follow all the laws on withdrawals and contributions. Specifically,

1. If you withdrew the money from a traditional IRA, it is subject to regular income tax. However, you don't pay a penalty if you are under age 59-1/2 because it was an inherited IRA.

2. If you made a contribution of money into a new IRA in your name, you may be able to take a tax deduction (depending on your income and other factors), but your contribution is limited to $7000 (or $8000 if you are over age 50) and you can only make contributions if you have compensation from working (generally this means wages or self-employment income).

fanfare

Employee

You ditributed the Inherited IRA so it is all taxable

If you moved funds into your Traditional IRA in excess of $7,000 or your earned income whichever is less

you have an excess IRA contribution

@marti6

dmertz

Employee

Are you the surviving spouse of the decedent? If not, the distribution from the inherited IRA is independent of the contribution to your IRA and the contribution to your traditional IRA is an ordinary contribution, subject to the contribution limits that apply to ordinary traditional IRA contributions.

If you are the surviving spouse of the decedent, perhaps what you did is a rollover to your own traditional IRA and you would indicate as such when entering the code-4 Form 1099-R for the distribution from the inherited IRA. (A non-spouse beneficiary is not permitted to do such a rollover.)

Opus 17Answer

Employee

You can't "merge" an inherited IRA into an IRA of your own.

If you are the spouse of the deceased, you have three choices.

1. Keep the IRA as an "inherited IRA" with its own separate rules.

2. Assume ownership of the IRA in your own name but keep it as a separate account.

3. Rollover the IRA into an IRA in your own name.

Maybe you did a rollover, and are calling it a "merge." In that case, after you enter the 1099-R from the IRA, there are some check boxes for different situations, answer that you did a rollover.

1. If you withdrew the money from a traditional IRA, it is subject to regular income tax. However, you don't pay a penalty if you are under age 59-1/2 because it was an inherited IRA.