Inherited IRA before RBD
My client is 58 years old and inherited an IRA from her sister (passed away at 55 years-old). When must she begin taking RMDs? What is the correct way to title such IRA? Any info that I missed regarding inherited IRAs would be much appreciated.
Thank you.
Permalink Submitted by Alan Spross on Tue, 2009-01-06 21:41
When did her sister pass?
Permalink Submitted by Jeff Stanga on Tue, 2009-01-06 21:43
December 2008
Permalink Submitted by mk foss on Tue, 2009-01-06 22:17
The first distribution must be withdrawn by 12/31/2009 based on the fair market value on 12/31/2008.
The account should be titled Sister A IRA as beneficiary of Sister B and should have the beneficiaries SSN associated with it.
No additional contributions are allowed in the beneficiary account. No rollovers are allowed. If the beneficiary wants to move it to another institution it must be handled by a transfer not a check payable to the beneficiary.
Permalink Submitted by Jeff Stanga on Tue, 2009-01-06 22:19
Thank you, and the RMD is based off of the inherited’s age (58).
Permalink Submitted by mk foss on Tue, 2009-01-06 22:23
The RMD is based upon the beneficiaries age in 2009 – probably 59.
Once the factor is determined it’s reduced by one each year to figure subsequent RMDs.
Permalink Submitted by Alan Spross on Tue, 2009-01-06 22:48
Except that this 2009 RMD that otherwise would be required is now waived by the recent tax legislation. No RMD is required in 2009. However, the beneficiary’s age in 2009 is still the starting point to determine the RMD divisor for the 2010 and later RMDs.