Inheriting a Beneficiary IRA
If someone is the beneficiary of an inherited IRA (Mom’s brother died and left IRA to Mom, she had been taking RMD’s and both were over 70.5). Three children inherited this IRA (from Uncle to mom to them). What are the distribution options for this double inherited IRA? Can they continue to take RMD’s over their life?
Permalink Submitted by Alan - IRA critic on Wed, 2017-04-05 15:23
They are successor beneficiaries, not designated beneficiaries. Therefore, they must continue Mom’s RMD schedule by using the divisor she would have used. They do not get a new life expectancy stretch using their ages.
Permalink Submitted by Brad Steinback on Wed, 2017-04-05 15:38
Thank you
Permalink Submitted by Sunkul soni on Mon, 2017-08-14 14:41
in the case above- what if the mother was not 70.5 upon passing, what is the children’s obligation at that point as successor benficaries in taking RMD’s?
Permalink Submitted by Alan - IRA critic on Mon, 2017-08-14 15:52
Mother had to start life expectancy RMDs in the year following her brother’s death, although she also had the 5 year rule option if brother passed prior to his RBD. Assuming she elected life expectancy RMDs the children would have to continue to use the divisors she would have used. That said, they should re check that Mom was using the correct divisors. For example, if brother passed after his RBD and mother was older than her brother, her RMD divisors would be based on brother’s age, not her own. If she was using the incorrect divisors then the children can adjust to what would have been the correct divisors for Mom, then continue to reduce those divisors by 1.0 in each successive year.
Permalink Submitted by Sunkul soni on Mon, 2017-08-14 16:29
is it fair to say then that the brothers divisors (date of birth and death) are going to be what drives the RMD amount for all future beneficiares (mom….kids…grandkids, etc)
Permalink Submitted by Alan - IRA critic on Mon, 2017-08-14 17:26
Only if brother was younger than mother AND brother passed AFTER his RBD. For example, if brother was 74 in his year of death and mother was older, then the RMD divisor for mother or any succeeding beneficiary of mother would be detemined as follows. Table I brother’s age 74 in year of death divisor is 14.1 and the first beneficiary RMD year is the following year so the initial RMD divisor is 13.1, then reduced by 1.0 each year thereafter. Deaths of mother or later beneficiaries do not change this, so this IRA would be drained by RMDs about 14 years after brother’s death. If brother was older than mother, then mother’s age in the year following his death would be used to get her RMD divisor. Again, if brother passed PRIOR to his RBD, then his age can never be used and mother’s age in the year following his death would determine the RMDs from there on.