Clear Money Guide
What this guide covers
A quick view of the questions and evidence developed below.
Updated July 28, 2026. Quick answer: If the person you inherited from ever made nondeductible contributions, a portion of every distribution is tax-free. That basis carries over to you — but you have to know it exists and be able to document it, and nobody will tell you.
Money already taxed once
Nondeductible IRA contributions were made with after-tax money and create basis. Distributions are then part return of basis and part taxable, pro rata. That basis does not die with the owner; it carries to the beneficiary.
Why it gets lost
Basis lives on a form filed with the owner’s tax returns, sometimes decades ago. It does not appear on a custodian statement, and no custodian tracks it for you. If the returns are not found, the basis is functionally lost and you pay tax on money that was already taxed once.
Get the inherited-account decision right the first time
Deciding when to take money out of an inherited account is a tax question as much as a rules question, and an adviser can price the withdrawal schedule against the rest of your income before a deadline sets the timing for you.
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What to look for, early
- The decedent’s old tax returns, specifically any year reporting nondeductible IRA contributions.
- Whether their preparer retained the filings.
- Whether a backdoor Roth was ever done — that pattern generates basis routinely.
Ask while the people who filed those returns are still reachable. This is the single most recoverable piece of value in a typical inherited-account settlement and it has a short practical shelf life.
Sources
Final regulations on required minimum distributions, published 19 July 2024; SECURE Act (2019) and SECURE 2.0 (2022); IRC §401(a)(9); IRC §2518 (qualified disclaimers); IRC §408(d)(8) (qualified charitable distributions). Cross-checked July 2026 against professional analyses from Kitces, Grant Thornton, Ascensus, Charles Schwab and Kiplinger. Where a deadline or dollar figure is indexed or was not read in primary source for this page, the text says so rather than asserting it.
This states what the cited authority says. It is not tax advice, and inherited account deadlines turn on facts about the decedent and the plan that no page can verify for you.