Are RMDS &Account Paperwork etc. Affected by Inheriting These?
Just to clarify, in that situation where inheriting 2 Traditional IRAs (Bank CD) from the same decedent, as a Non spouse Beneficiary, decedent had two IRA accounts at the same bank—one she opened herself and listed this beneficiary and the other (also CD) that she inherited from her sister (so title currently lists both the most recent decedent’s and the sister’s name (from whom she inherited it) and also lists this beneficiary as account beneficiary (not in title), the beneficiary can still take RMDS according to their Single Life Expectancy tables from both accounts in the above scenario, right? It’s just that the divisor is different because their previous year FMVs would be different is that correct? Also, in same case, since they will be 2 separate account plans, should custodian be sending 2 separate sets of papers to complete –1 for each account plan? Or can they list more than one plan on the initial agreement? And what if the Custodian only puts the original owner’s name and not the name of the most recent decedent from whom the Beneficiary directly inherited– is that also acceptable?Thanks again.
Permalink Submitted by Alan - IRA critic on Wed, 2016-10-19 00:14
The RMD divisors are different for these two inherited IRAs because the one inherited directly from the owner will use the life expectancy of the beneficiary based on their age at the end of the year following the year of death. But the IRA on which she was the successor beneficiary (inherited twice) will have the same divisor as if the first beneficiary had not passed. Therefore, the current beneficiary’s age only comes into play for one of the accounts. The prior year end balance is part of the calculation, but does not affect the divisor, only the amount of the RMD. These two accounts are treated separately for all purposes, so separate sheets should be filled out for each unless all the information provided is identical. The custodian may require separate sheets even if the info is identical. As for a re titling that includes the owner and not the most recent decedent, that is not consistent with the Form 5498 Inst which states that for successor beneficiaries show the prior beneficiary as the decedent (owner) and the new beneficiary as the beneficiary. That will eliminate the name of the owner. Since the custodian issues the 5498 form, the title should be the same as shown on the 5498. Further, it is important the the current beneficiary does NOT get these two IRA accounts mixed up because they will have different RMD divisors.