Gross McGinley LLP

gross-headerimg-3
Blog Disclaimer

Blog Disclaimer

This Blog is intended for educational and informational purposes and intended to only provide you with a general understanding of the law, not to provide any legal advice, including on the subject of the Blog. Laws that may pertain to this Blog will vary by jurisdiction, and the information on this blog may not apply to you. The content within this Blog is not intended, and should not be construed, in any way to be legal advice and thus you should not rely on any information provided in the Blog as legal advice. You should consult with appropriate legal counsel concerning any issues for which legal advice may be needed. Your review or use of the Blog and the content therein is not intended to create, and does not constitute, an attorney-client relationship. Please contact us if you have any questions about a Blog or would like more information, but, by contacting us, no attorney-client relationship is formed between you and Gross McGinley, LLP, including the Blog author. Do not send any confidential information to Gross McGinley, LLP or the authors of the Blog without first speaking to one of our lawyers and receiving our permission to provide confidential information. Unsolicited confidential information sent to us may not be subject to an attorney-client privilege and may not be treated as confidential. This Blog is not published for advertising or solicitation purposes. Gross McGinley, LLP disclaims all liability to all persons for any claim, loss, liability or any damages that may arise in connection with the Blog and any content or information contained in the Blog. Even though we strive to create our Blog content based on our current understanding of the law, we cannot and do not guarantee that the content and information in the Blog is current, accurate, or complete. Gross McGinley, LLP owns the copyright in the Blog, which is protected by federal and state laws, including copyright laws. The Blog cannot be altered or modified in any way. A copy of the Blog may be used and printed only for personal, educational, informational and noncommercial purposes. The Blog cannot be used for any other purpose without the express permission of Gross McGinley, LLP.

Inheriting IRAs in Pennsylvania

Written by: on October 08, 2019 | Category: Blog | Tags: ,

While IRAs are generally non-probate assets (not controlled by the decedent’s Will), IRAs, both traditional and Roth, may be subject to PA inheritance tax, (in addition to income tax for beneficiaries of traditional IRAs when drawn upon). If the decedent was over age 59-1/2 at the time of death, the IRA will be subject to PA inheritance tax. If the decedent was under age 59-1/2 at the time of death, the IRA will not be subject to inheritance tax. Where spouses are named beneficiaries of IRAs, the applicable inheritance tax rate is presently 0% and where children and grandchildren are beneficiaries, the rate is presently 4.5%. It is imperative that those with IRAs review them to ensure that the beneficiary designations, both primary and secondary, are complete and up to date.

Generally, when a spouse is the designated beneficiary of a traditional IRA, that spouse has the option to roll over the inherited IRA into the surviving spouse’s own IRA and thus able to defer payment of income tax until that spouse is age 70 1/2 then over that spouse’s lifetime as the inherited IRA proceeds are withdrawn.  When children are beneficiaries, they typically have the option to i) roll the inherited IRA into a “stretch” IRA over the child’s lifetime or the lifetime of the oldest child if there are multiple child beneficiaries and begin taking required minimum distributions by December 31st of the year following the decedent’s death; ii)  cash out the IRA over five (5) years (by December 31st of the fifth year following the IRA owner’s death) or ii) simply cash out the IRA in full following the IRA owner’s death.  Each withdrawal will be included in that beneficiary’s taxable income during the year the funds are withdrawn.

Please note that Congress is considering legislation to limit the length of a stretch IRA for non-spouse beneficiaries to ten (10) years after the original IRA owner’s death, as opposed to the lifetime of that non-spouse beneficiary.

For many of us, IRAs are a significant part of our retirement holdings and appropriate attention must be paid to proper and complete beneficiary designation. For those beneficiaries inheriting IRAs, it is important to be aware of available options following the IRA owner’s death.  The Estates Practice Group at Gross McGinley can answer any questions you may have about IRAs and counsel you on IRA holdings and distributions to ensure your intent and wishes are followed.


Attorney Thomas A. Capehart provides guidance on wills, estate planning, real estate, and elder law matters. 

Next Previous
View All Attorneys
View All Practice Areas
View Blog