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Are Distributions from 1099-R Code 4 taxable to the beneficiary?

BarrysTax
Level 1

I have a client that received a 1099-R distribution from her father's IRA upon his death. Is that taxable or not due to her stepped up basis due to her father's death? 

3 Replies 3
IRonMaN
Level 15

It is indeed taxable.

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qbteachmt
Level 15

"due to her stepped up basis due to her father's death"

There is no Step Up in basis for this type of account or holding.

If he had basis in that account, she would inherit that basis status.

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Terry53029
Level 11
Level 11

There are new rules concerning inherited IRA's, here is a link to start to research those rules. Also if it is a traditional IRA you need to find out if there is a basis, and if so, there are rules governing that distribution.    https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary