Bene IRA for daughter of deceased Father

Submitted by Julie Brangenberg on Tue, 2014-03-11 14:46

Have a client whose father passed away 11/26/2008. She inherited two IRA’s. One with our Brokerage Firm, and one with another Brokerage Firm. She began taking RMD from Bene IRA with us in 2010 (I believe she didn’t need to in 2009, because of Recession and ruling that RMD’s didn’t have to be taken that year). On her other Bene IRA with another Firm, she is being told that since 5 years are up, she has to take the money out. It looks like she has taken money out of it, but don’t know which method she chose for distribution. She wants to bring her other Bene IRA account over to us. What questions should I be asking her other Advisor? What should I be looking out for?



Submitted by Alan - IRA critic on Tue, 2014-03-11 16:07

Did her father pass prior to his required beginning date? Was she the sole beneficiary on each IRA and father was original owner of each IRA? It might be possible to restore the lifetime stretch in this case with make up RMD distributions, but you would need to find out how much she took out of the other IRA each year and the year end balance for each year starting with 2009. Apparently, the other custodian thinks the 5 year rule applies to that IRA because not enough was taken out each year for the life expectancy RMD. I assume that ONLY her RMD for your firm’s IRA was taken out of your IRA.

Submitted by Julie Brangenberg on Tue, 2014-03-11 19:02

Father passed after his required beginning date.  Was his wife’s IRA prior to her passing.  She was bene., along with her sister and brother.  She took her RMD from her Bene IRA with us.  It appears that she took a RMD from other Custodian as well, but not sure if enough.

Submitted by Alan - IRA critic on Tue, 2014-03-11 19:44

  • Now am totally confused. Which is correct:  1) Father was original owner and his beneficiaries were his wife, her sister (your client) and her brother. Wife then died?  2) Or, father’s wife was original owner . She then passed and left IRA to him and he named your client and her brother as his successor beneficiaries? 3) Were separate inherited IRA accounts created?
  • Note that we must also consider that when a spouse inherits an IRA from deceased spouse original owner, the surviving spouse can treat the IRA as their own or rollover their share over to their own IRA. However, if the surviving spouse fails to take the full RMD as a beneficiary and if they are the sole beneficiary, then they default to owning the inherited IRA.
  • If it helps to clarify you can call the father A, his wife B, your client C and her brother D. And it is possible that the other firm’s IRA has a different past than the one you have, so we have a situation that could be very complex depending on who did what and in what order.

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