Should an IRA Received From an Estate Be Entered in Form 1041?

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Estates May Receive IRA Distributions

An estate can be the beneficiary of an IRA. Withdrawals are taxable on the estate’s tax return when taken by the estate before transferring the IRA to the estate’s beneficiaries.

The Estate Might Not Be the Beneficiary

An IRA has a designated beneficiary. After the account owner’s death, an IRA passes directly to the beneficiary and not through the estate of the decedent. Taxable distributions from an IRA are therefore reported on the income tax return of the beneficiary and not on that of the estate.

Bottom Line

An IRA with an individual named as the beneficiary is inherited directly by that individual. In such a case, there's nothing for the estate to report on its tax return (Form 1041). If the estate is the beneficiary, there is no income to report on Form 1041 if the estate doesn't take withdrawals from the IRA. However, the estate would need to report any IRA withdrawals taken by the estate as beneficiary on Form 1041.

 

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About the Author

Brian Huber has been a writer since 1981, primarily composing literature for businesses that convey information to customers, shareholders and lenders. Huber has written about various financial, accounting and tax matters and his published articles have appeared on various websites. He has a Bachelor of Arts in economics from the University of Texas at Austin.

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