Client has 3 IRA accounts she will inherit, IRA owner was not RMD age.
Client is age 41
Any problem if she wants to take a partial distribution and pay tax now
and transfer the rest of money to an Inherited IRA in to one account?
Can she take a cash out of one Ira and combine the other two, all are from the same decedent.She then would need to use the stretch or 5 year payout correct?
Yes, she could do that if the amount of cash she needs happens to equal the balance of one of the accounts. Then the other two could be combined. She can elect the 5 year rule if she wants to, but in most cases she should keep her options open by taking life expectancy RMDs. She can always take out more if she wants to.
Permalink Submitted by Alan - IRA critic on Thu, 2017-08-17 23:11
She can only combine the inherited IRA accounts if they are both inherited from the same decedent and have the same RMD divisors. All 3 IRA accounts should be re titled, non reportable transfers made if combinable, and then the partial distribution taken from the combined account. If the partial distribution is taken later than the year of death, it will probably cover the beneficiary RMD for that year.