Inherited IRA
Our client has an Inherited IRA (that he inherited from someone other than his spouse). He passed away earlier this year and his spouse was named as primary beneficiary. He had been taking out RMD’s from the Inherited IRA. He was over 70 1/2. His spouse is over age 70 1/2. What are her options? Does she have to move the Inherited IRA to an Inherited IRA for her benefit? or can she move the funds directly to her Rollover IRA that she already has established. Please help! Thanks,
Permalink Submitted by Alan - IRA critic on Thu, 2014-03-27 21:37
Once an IRA is inherited by a non spouse, it must stay remain an inherited IRA. Your client’s spouse is the successor beneficiary to her husband, but she must maintain the same RMD schedule he was using. He had established a divisor that was reduced by 1.0 each year and she continues to reduce that same divisor by 1.0 in each successive year. She cannot roll this over to her own IRA because the client was not the original IRA owner. And she can only move funds to another custodian by direct transfer, not by a rollover.