Will I need to pay taxes on inherited IRA withdrawals?

When you inherit an IRA, the tax treatment depends on your relationship to the deceased and the type of IRA. Since this was your mother's IRA, here's what you need to know: Yes, you will generally need to pay income taxes on distributions from an inherited traditional IRA. The money is taxed as ordinary income in the year you withdraw it. This is because traditional IRAs are funded with pre-tax dollars, and taxes are due when the money comes out, whether that's by the original owner or the beneficiary. As a non-spouse beneficiary of someone who passed away after age 72 (which started RMDs), you'll need to follow the 10-year rule - meaning you must withdraw all assets from the inherited IRA by the end of the 10th year following the year of your mom's death. You don't need to take withdrawals annually, but everything must be out within that 10-year window. You do have some flexibility in how and when you take distributions during that 10-year period, which can help manage your tax liability.

After my dad passed last year, I was completely lost about how to handle his IRA too. The 10-year rule was confusing, and I kept getting different advice from everyone. I ended up using https://taxr.ai to analyze my situation - uploaded my documents and had them scan my dad's IRA statements. They explained exactly how the inherited IRA distributions would impact my taxes each year and created a withdrawal strategy that minimized my tax burden. Seriously saved me thousands in potential tax mistakes. Their tools specifically designed for inherited accounts were super helpful since this isn't something most of us deal with regularly.

Just wanted to follow up since I tried taxr.ai after seeing the recommendation here. Wow - it really cleared things up for me! I uploaded my grandmother's IRA statements and my last year's tax return, and they created this really clear breakdown showing how different withdrawal strategies would affect my taxes. Turns out taking equal amounts over 8 years works best for my situation (leaving the last 2 years of the 10-year period open in case my income changes). They even flagged that I qualified for an exception I didn't know about because of the specific type of IRA. Definitely worth it if you're facing this situation.

When my brother passed and left me his IRA, the hardest part was actually getting clear answers from the IRS about some unusual aspects of our situation. I spent WEEKS trying to get through to someone who could help. After 20+ attempts calling the regular IRS line, I found https://claimyr.com and watched their demo at https://youtu.be/_kiP6q8DX5c - they basically hold your place in the IRS phone queue and call you when an agent is about to answer. Got connected to an actual IRS specialist in a day instead of endless busy signals. The agent clarified exactly how I needed to report the inherited IRA distributions on my taxes and confirmed I was eligible for a special exception in my case.

I need to publicly eat my words here. After being skeptical, I tried Claimyr when I couldn't get through to the IRS about my inherited IRA situation. Within 3 hours, I was talking to an actual IRS representative who walked me through exactly how to handle the RMD requirements for my specific situation. Got confirmation that I didn't need to take a distribution in the year of death (was getting conflicting info about this). Literally spent 8 separate days trying to call before this with no success. Apologize for jumping to conclusions - this service actually delivered exactly what they promised.

One thing nobody mentioned yet - if the inherited IRA was a Roth IRA (not traditional), the tax situation is completely different. With inherited Roth IRAs, you still have the 10-year rule as a non-spouse beneficiary, but qualified distributions are generally TAX-FREE. So before you do anything, double-check what type of IRA you've inherited. If it's a Roth and it was established more than 5 years before your mom passed away, you won't owe income tax on qualified distributions.

Does anyone know if there are different rules depending on when someone inherited an IRA? My aunt left me one back in 2019 and I was told different rules applied then.

One important thing to consider that hasn't been mentioned yet is state tax implications. While everyone's focused on federal taxes (which are definitely the main concern), some states have their own rules for inherited IRA distributions. For example, some states don't tax retirement account distributions at all, while others might have different timing rules or exemptions for inherited accounts. Since you're dealing with a $67k inheritance, the state tax piece could be significant depending on where you live. Also, make sure you're working with the IRA custodian to properly retitle the account as an inherited IRA. This needs to be done correctly to preserve the tax-deferred status and avoid any immediate tax consequences. The custodian should be familiar with the process, but it's worth double-checking that they're following the proper procedures. Good luck with everything, and sorry for your loss. Inheriting retirement accounts is never easy, both emotionally and from a tax planning perspective.