Do heirs have to pay tax money from an IRA?
Minnesota estate planning attorney Karen Schlotthauer explains that heirs of an IRA do have to pay some income taxes.
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Do you have to pay taxes on money coming out of an IRA? IRAs, retirement plans, those are assets where money goes in on a tax-deferred basis or a pre-tax basis. And so when it comes out, the recipient does have to pay income taxes on the amount coming out. So let’s say I’m going to receive $100.00 from my mom’s IRA. There’s a rule that applies. I have to take out the required minimum distribution after her death, but that’s based on my remaining life expectancy. So I’ll be able to spread out that $100.00 over many, many years with my long life expectancy, which is a good thing because as the money stays in that account, it continues to grow on a tax-deferred basis.