Tax Treatment of Inherited IRA Depends on Distribution
When you inherit an IRA, what taxes do you have to pay on it? The income tax you pay on an inherited IRA depends on how you receive the money. If you receive the money immediately upon the IRA owner's death then you'll be taxed at your regular income tax rate. If you roll the IRA money into an inherited IRA you have up to five years to withdraw the money and pay taxes at a marginal tax rate. For more information contact an estate attorney or a tax preparer.