inherited ira
person dies on 12/01/2007 naming 2 children as beneficiaries.
2 children must make RMD by 12/31/2008.
2 questions:
Does re-naming accounts IE( john doe deceased 12/01/07 FBO jim doe beneficiary) for both beneficiaries need to be made by 9/30/08 or could it be done on 12/01/08 and then taking RMD by 12/31/08?
Can bank when splitting up accounts 50/50 (IE: 100,000 split up 50,000 for child A and 50,000 child b) end the old CD that had a more favorable rate (IE: 100,000 CD 6%, banks wants to set up 2 $50,000 at 3.5%?
Permalink Submitted by Alan Spross on Sat, 2008-02-23 18:26
This could be done by 12/1/08 and the RMDs taken by 12/31/08. 9/30 is just the date by which any beneficiaries that are paid off or disclaim must be eliminated, and those that are left considered for RMD determination. It is particularly important for any charitable beneficiaries to be paid and eliminated by this date.
Bank procedures such as you described are within their authority, and often seem to solely reflect the bank benefiting from a customer’s death by reducing the interest rate. CDs often create problems with respect to RMDs, account portability and separate accounts. In this case if the children are only a year or two apart in age, and the 6% rate term expiration is far enough out, it may be wise to pass up the separate accounts until the CD expires. They can still create separate accounts after 12/31/08, but the oldest child’s life expectancy must apply to both. I wonder if the bank procedure is the same when interest rates are rising rather than falling……….