Multiple Non-spouse beneficiaries
My wife is one of five siblings listed as primary beneficiaries on her Mother’s IRA. Her Mother died February, 2008, after her RBD but she had not taken her RMD for 2008. In order to preserve longer life expectancy for the younger beneficiaries the bank says they will distribute from the Mother’s IRA into separate beneficiary accounts for each beneficiary (I need to dtermine how they intend to title these accounts). Is this the correct process? Or should the Mother’s IRA be divided into separate accounts (one for each beneficiary) with the Mother still as owner and one beneficiary per account before any transfer to individual Inherited IRA’s occurs. Also shouldn’t the Mother’s RMD for 2008 be taken by the beneficiaries before any transfer into separate accounts for each beneficiary? Thanks for any comments.
Permalink Submitted by Al Fry on Wed, 2008-04-30 19:03
Sorry for your loss. Mother can no longer be the owner. Each inherited IRA should be “(Child’s name) as beneficiary of (Mother’s name)”. The distribution for Mother’s RMD for 2008 can come out anytime, as it will be taxed to the five children either way, unless one child wants to take it out of theirs. You may have one (one of the boys, in my case) that wants a lump sum right away, in 2008. If large enough, that could satisfy Mother’s RMD.