As a beneficiary of a traditional IRA, you pay which taxes on withdrawals?

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Multiple Choice

As a beneficiary of a traditional IRA, you pay which taxes on withdrawals?

Explanation:
Withdrawals from a traditional IRA are taxed as ordinary income when you take them. As a beneficiary, any distributions you receive are included in your gross income and taxed at your marginal ordinary-income tax rate. The money inside the IRA grows tax-deferred, so taxes are paid on withdrawal rather than as capital gains. Estate taxes relate to the decedent’s estate, not to the ongoing distributions you receive as a beneficiary. (Note: if there were nondeductible contributions in the original account, a portion of distributions can be a non-taxable return of basis, but generally withdrawals are taxed as ordinary income.)

Withdrawals from a traditional IRA are taxed as ordinary income when you take them. As a beneficiary, any distributions you receive are included in your gross income and taxed at your marginal ordinary-income tax rate. The money inside the IRA grows tax-deferred, so taxes are paid on withdrawal rather than as capital gains. Estate taxes relate to the decedent’s estate, not to the ongoing distributions you receive as a beneficiary. (Note: if there were nondeductible contributions in the original account, a portion of distributions can be a non-taxable return of basis, but generally withdrawals are taxed as ordinary income.)

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