PA Inheritance Tax and the IRA – What You Need to Understand

From our “Ask a Question” Mailbag: PA Inheritance Tax and the IRA

Most Recently Updated July 8, 2018.

“My Father died at age 58, is his IRA subject to the Pennsylvania Inheritance Tax?”

PA Inheritance Tax and the IRA – Is There an Effect?

With one exception, if a Pennsylvania resident dies before reaching the age 59½ his IRA is not subject to the Pennsylvania Inheritance Tax. This is because of a Pennsylvania rule stating that there will be no tax levied on the value of any retirement plan for which the deceased would have been penalized had he removed the funds during his lifetime.

When are IRAs subject to a Penalty?

IRAs are subject to penalty if funds are removed prior to the owner reaching age 59½, so they are not subject to the Pennsylvania Inheritance Tax if the deceased died prior to reaching age 59½.

Note, if the deceased was disabled at the time of his death, then the penalty against early removal for IRAs is waived, and with it, the IRA becomes subject to the Pennsylvania Inheritance Tax.

More Probate Questions?

The effect of the PA Inheritance Tax on an IRA is only part of the overall probate process. By all means, if you wish to learn more, please read my more detailed article, The Probate Process All You Need to Know.

In Conclusion: PA Inheritance Tax and the IRA

I hope that this article was helpful in explaining the effect of the PA Inheritance Tax on the IRA. Further, I included links to even more detailed information on my website. Therefore, please contact me and let me know how I did. Certainly, your comments and questions are welcome!

Let our Probate Lawyers help walk you through what can be a confusing process. To begin with, call to speak to one of our experienced Probate Attorneys.  By all means, our lawyers are ready to answer your questions. In fact, feel free to contact our office for a free consultation. Ultimately our goal is to make the process as painless as possible!

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Tags: Bucks County, Inheritance Tax, Pennsylvania, Probate, Probate Attorney, Probate Lawyer