Inherited 403(b) transferred to inherited IRA – RMD?

Submitted by David Boen on Wed, 2017-11-01 07:18

Hello,

I need some help interpreting the RMD rules.

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds

My mother passed away on Nov. 11, 2016, was over 70 1/2 and had begun taking RMDs from her 403(b). I inherited the 403(b) plan as a non-spouse beneficiary and direct transferred the account to a inherited IRA custodian (TD Ameritrade) earlier this year (2017). 2017 distributions were made for my mother from the 403(b) plan payable to myself prior to the direct transfer.

Am I required to make take a distribution for myself from the inherited IRA in 2017? I chose the single life expectancy table, as I want to stretch the IRA.

Thanks.



Submitted by Alan - IRA critic on Wed, 2017-11-01 16:56

  • The 403b plan should have distributed your mother’s incompleted 2016 RMD (if any) and your own 2017 beneficiary RMD at the time of the direct rollover, since those amounts are not eligible for rollover. If so, there is no inherited IRA RMD due for 2017, and your first inherited IRA RMD will be due by 12/31/2018. Your 2018 RMD divisor will be 1.0 less than your divisor for 2017 which the 403b plan should have used. It appears you may need to determine how the 403b plan calculated the earlier distribution, ie. how much of your mother’s 2016 RMD remained unsatisfied, and how much of that distribution was your own beneficiary RMD. 
  • If you find out that the plan overlooked your own beneficiary RMD before doing the transfer and therefore included it in the rollover, your 2017 beneficiary RMD is still deemed satisfied and taxable. However, your inherited IRA would then have an excess contribution that would have to be removed from the inherited IRA. At the end of the day, your reported distributions in 2017 should total your mother’s incomplete RMD plus your own beneficiary RMD for 2017.

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