Transfer IRA to children, Taxable?
May 26th, 2009 | 
Author: 
tjlim asked:
My father is planning to transfer his IRA to me and my sisters IRA or UGMA/UTMA, equally.
He is not yet in retirement age. (below 65)
Is the transfer taxable?
*As far as I have heard, if he withdraws the IRA below retirement age, he would be taxable and we would be taxed as gifts.
Possibly Related Posts:
- Personalized Business Gifts
- What should I do about my selfish mother?
- What’s the etiquette here?
- Can you help me stop spending $$$$?
- Should I be Suspicious?
Category: 
Tags: 
gift wrap
When he lists all as beneficiaries, the money goes directly to the beneficiaries, WITH NO TAX.
However, if he does what he intends, he will pay plenty of taxes, and you can look all of this at,
and I would not take any tax advice from those on this site without looking it up on the IRS site. Also he can call the IRS and ask for the local IRS office near his home, and get free advice.
He still is responsible for the taxes as income unless it’s in a ROTH IRA which means the IRA was established with net income that was already taxed. If he is less than 59 1/2, he will pay a 10% penalty in addition to the regular income tax for any withdrawal.
The IRS does not care what is done with the money, but they will get their taxes, unless the person gets the money as a beneficiary when the person dies.
A regular IRA is includable as income on the income tax form regardless of the time it is withdrawn, and again if before 59 1/2 then there is an additional 10% penalty unless is is totally permanently disabled.
You are mixing gift tax with IRA taxes, and they are totally separate!
GOD bless us always.
MBA-Boston Univ.
CPA-retired
gifts for her
An IRA cannot be “transferred.” It can be inherited.
romantic gift
Regardless of his age the distribution will be taxable. If he’s under age 59 1/2 at the time, there’s a 10% penalty on top of that as well.
He cannot transfer the IRA to you. All he can do is withdraw the funds, pay the tax, and give you whatever is left over. The only way he can “transfer” the IRA to you is in his will. And of course the transfer won’t happen until after his death.
perfect gift
I do not believe that he can do what you have suggested. He could withdraw the total amount in the IRA and make a contribution to your IRA but that would not make any sense.
He needs to talk to someone about this BEFORE he does anything. I would not advise him with out a clear understanding out his purpose. This could cost him and you thousands of tax dollars that need not be paid at this time.
gifts for women
He can’t transfer an IRA it is for his retirement. At age 59.5 he can withdraw and pay taxes before that he pays a penalty also.