SCENARIO: Phyllis maintained an IRA account at the brokerage firm ABC. On Februa

Question

SCENARIO: Phyllis maintained an IRA account at the brokerage firm ABC. On February 11 of the current year, she requested a check for the balance of her account. She received the check made out in her name and deposited it the same day in a new IRA account at the brokerage firm XYZ. Phyllis then requested a check on May 8 from XYZ, which was deposited in another new IRA account 35 days later. Is the May 8 distribution taxable to Phyllis? How would I form this scenario into a Tax Research Memo to include relevant facts, issues, conclusion, and support section?

Explanation / Answer

An Individual Retirement Account[1] is a form of "individual retirement plan",[2] provided by many financial institutions, that provides tax advantages for retirement savings in the United States. An individual retirement account is a type of "individual retirement arrangement"[3] as described in IRS Publication 590, Individual Retirement Arrangements (IRAs).[4] The term IRA (which is used to describe both individual retirement accounts and the broader category of individual retirement arrangements) encompasses an individual retirement account; a trust or custodial account set up for the exclusive benefit of taxpayers or their beneficiaries; and an individual retirement annuity,[5] by which the taxpayers purchase an annuity contract or an endowment contract from a life insurance company

so the answer is no it is not taxable

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