Question : How are mutual fund beneficiaries taxed?
I am the beneficiary of my father's mutual fund or IRA. When the money is distributed to me, does the IRS see that as income or as inheritance? How it is taxed?
- asked by michaelblog
All Answers:
Answer #1
since it was never taxed, it will be upondistribution, but you won't have to pay any of thepenalties.
- answered by Scott K
Answer #2
The IRA was tax deferred, which means when youtake the money, you will be taxed. This is taxedas regular income. (Because your dad never paidthe taxes on it, you get to.)IF the mutual fund isa separte non-IRA account, you will get taxed onlyon the difference between the value on the date ofdeath and the value when you sell it. This willalways be a long term gain or loss.
- answered by v b
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