Hey Stan,
Thank you for your condolences
Hopefully you did that in your name _as_beneficiary_ of your mother.
I worked with the broker who was handing the account for my mom (it's a
major brokerage) to make sure everything was done correctly. My mom had
named me beneficiary on every account she had, so nothing ended up in
probate.
I'm guessing that your mother died in 2019? If by any chance she died in
2020, the above rules are still in effect but you no longer use the
life-expectancy tables to compute a Required Minimum Distribution.
Instead, you have 10 years to drain the IRA, on whatever schedule you
choose.
She passed on the 5th of January this year. She had already declared a
specific amount she was going to withdraw for this year and I have to
keep that going. After the year is up I am going to adjust the
disbursements to fit my financial needs for my current season of life.
Right now, I plan to take most of it and put it into a Roth as it is
disbursed. This is before I have had any real planning meeting with the
advisor, mind you, so that isn't set in stone
investments: Assets:Investments:Mother's IRA. Your transaction will
debit that account by the value of the IRA. You're not required to
follow Generally Accepted Accounting principles, so the credit account
in that transaction is up to you. Here are some options:
* Your main equity account.
* Equity:Extraordinary Income
(one account for this and other large one-time entries)
* Equity:Inheritance(s)
* Income:Inheritance(s)
* Income:Miscellaneous
Right now, the transactions go as follows:
IRA Account -> Brokerage Checking Account (some requirement - I forget
why right now) -> Personal Checking Account (later some of this will go
into a Roth as well).
IRA Account -> Federal Taxes (still working on the state tax estimate)
I guess my hangup was that I felt I needed to show it as income since
taxes were being taken out as part of the disbursement. But - thinking
it through with your help - it's not like this money is coming from a
3rd party like an employer or a client. It's already my money, so it's
an asset right?
Here's my answer to a related question that you didn't ask:
Your mother's IRA, like your other investments, will grow or shrink over
time. Those changes don't affect your income tax. But over time, the
balance in GnuCash Assets:Investments:Mother's IRA will get further and
further out of step with the balance in the actual account at the
brokerage. Since there's no need to keep track of profit and loss in an
IRA, I resolve this by checking the balance at Vanguard every three
months, and then I debit Assets:Investments:My IRA and credit
Equity:Unrealized Gains/Losses. (If the IRA is down, the credit and
debit are reversed. If you enter negative numbers, GnuCash does that for
you automatically.)
Thanks for this. You're right - it was a question I knew needed an
answer but hadn't gotten that far yet
Maybe it bothers you that your income on your tax return doesn't match
your income in GnuCash?
Something like that. I was picturing having to report where all my money
came from for the year. So, because I was getting money from something
and paying taxes on it I thought that meant the transaction should be
classified as income. But, it sounds like it's just an account transfer
that costs me taxes to do so to speak
Unless your mother's estate is large enough that you need to be
concerned with Federal or State estate tax, these refunds won't flow
into taxes.
Nah, it was pretty simple. And the amounts of the refunds on these
accounts are pretty small.
Thank you for your very well thought out response
Dave
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