Inherited IRA
I have inhereited 2 IRAs from my parents. One of them is titled Dave Smith DECD Mary Smith, this was my Mother’s IRA who died in 2009. My Father did not Roll it over to his IRA after her death. The second is titled Dave Smith DECD. After my Father’s death in 2011, the Broker Dealer took the RMD for both of these IRAs from his IRA. Is this correct? And, can I do the same for the 2012 RMD?
Permalink Submitted by Alan Spross on Tue, 2012-03-13 18:15
The answer here is quite complex and depends on a few additional factors. I assume that an estate or trust was not involved here.
1) What was your mother’s age at her death? And your fathers at his death? If either was 70 or 71 need exact DOBs, otherwise just the age.
2) Was your father the sole beneficiary of her IRA?
3) Did he take an RMD in 2010 calculated as a beneficiary RMD?
4) Did he name you as beneficiary on his IRA, and as successor beneficiary to him on your mother’s IRA?
Permalink Submitted by Denise Sowell on Wed, 2012-03-14 12:33
Here are the anwers to your questions:
1. My Mother”s age at death was 69, she died in 2008 and my Father’s age was 77 and died in 2011.
2. Yes, My Father was the sole Primary Beneficiary of my Mother’s IRA.
3. Yes, he took a RMD as Beneficiary RMD.
4. Yes, he named me as the Primary Beneficiary along with my 3 sisters for both his IRA and as Successor Beneficiary for my Mother’s IRA.
Thank you for your assisitance.
Permalink Submitted by Alan Spross on Wed, 2012-03-14 20:43
Based on your information, the only way that your father would have been deemed to be the owner of your mother’s IRA would be if your father’s RMD for 2010 as a beneficiary fell short of the correct calculation of that RMD. If he was still 76 on 12/31/2010, his divisor would have been 12.7, if he reached 77 by 12/31/2010 his divisor would have been 12.1. You should hope he fell short because that is the only way he would have become owner of that IRA, and he needed to be the owner of both IRAs for you beneficiary RMDs to be aggregated as they were. It is also the only way that you would be able to use your own life expectancies for your mother’s IRA because you were successor non spouse beneficiaries of your father rather than designated beneficiaries. That means on that one IRA account, all 3 of you would have to use your father’s remaining life expectancy as your RMD divisor.
If his divisor was 12.1 for 2010, it would be 11.4 for 2011. Starting in 2012, the 3 of you would have to reduce his divisor by 1.0 each year. That would result in 10.4 for 2012, 9.4 for 2013 etc. Conversely, for his own IRA you can each use your own single life expectancies starting in 2012 if you create separate account before the end of this year. Since the RMD divisors will be different, none of you should combine these inherited IRAs. You should each end up with two inherited IRAs each, with different RMD divisors for each of your two inherited IRAs.
If there is a shortfall in the 2011 RMD taken to complete your father’s 2011 RMD, take it from your mother’s IRA.
For 2012, you should treat your inherited IRAs as indicated above UNLESS you determine there was a shortfall in the amount your father distributed in 2010 from your mother’s IRA. If there was, then things change in your favor.
Permalink Submitted by Denise Sowell on Wed, 2012-03-14 21:00
Thank you for your reply. You have been very helpful.