Who Pays Taxes on an IRA?

tax dollarsDear Liza,  I am the personal representative for my mother’s estate in Maryland.  My mother, who is deceased, was the beneficiary of a small IRA. My mother’s estate is to be divided among her three grown daughters, myself included.  Who pays the tax on the IRA when it is withdrawn? The beneficiaries (you and your sisters) will be responsible for the income tax due on the IRA when you withdraw it. You will each get what’s called an “Inherited IRA.”  Check with your plan administrator to find out what your options are for those withdrawals. You probably will have to withdraw the money within five years of your mother’s death, you will definitely have to start withdrawing the money within the first year.