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Ask Dave

Inherited IRA Taxable?

An IRA is taxable when you cash it out, unless it was your spouse's. Follow the baby steps if you do cash it out.

QUESTION: Rob wants to know what he can do with the money he has inherited from an IRA.  Is it taxable?

ANSWER: It’s all taxable, so when you cash it out you will have to pay your income tax rate on it.  It can only be sheltered from taxes if it was your spouse’s IRA. 

After that, follow the baby steps.