Inherited Ira Question
My wife has just passed away- She is leaving her ira to the 4 children. my wife was age 63 on her date of death- I am getting the run around from a
a brokerage firm-they say that the children have to take a distribution this year so the can lock their RMD age in for the future payment. Ed s letter say mby my interpitation that they are take the RMD the year after their mother passed away2009- could you let me know what is correct -i really neeed to advise the step children about this provision-TKS Rodney Spence
Permalink Submitted by Alan Spross on Wed, 2008-07-16 19:44
Sorry to hear of your loss.
Ed is correct and the brokerage firm is not. Since you wife passed well before her required beginning date, the beneficiaries do not need to take their first RMD until year end 2009. They should also create separate accounts for each of them prior to that date so that each one can take RMDs based on their own remaining single life expectancy. They would use the age upon their birthday in 2009.
They should also each name their own successor beneficiaries for their share and on their new separate accounts ASAP in case anything should happen to them. They also need to know that they can only move their share by direct transfer, and cannot do a rollover. If they get a check made out to them it is taxable and cannot be rolled over. Finally, if your wife ever made non deductible contributions and filed Form 8606, the beneficiaries would inherit any basis remaining, and would split it equally. This is important as it would make their RMDs less than 100% taxable.