Inherited IRA Non-Spouse Distribution

Submitted by Danny Harlow on Thu, 2018-03-22 17:14

We have a client that passed last year and the two sons inherited her IRA. Son #1 dob is 12/28/59 and Son #2 is 3/8/1950. Son #1 wants to satisfy the RMD for both of them in year one. Who’s age should the distribution be based on and is this allowable? We will base calculation on the FULL year end balance for the IRA.



Submitted by Alan - IRA critic on Thu, 2018-03-22 18:10

  • If you are referring to the remaining decedent’s RMD for 2017 that can be completed in any combination between the two sons. This would be the RMD that the decedent did not complete so the age of the sons is not a factor.  The son that completes this RMD should also file a Form 5329 to request waiver of the penalty for not completing the 2017 RMD in 2017.
  • On the other hand, if you are referring to the 2018 beneficiary RMDs for the sons, the best way to handle that is to first create separate inherited IRAs for each by direct transfer. Then each son can take their 2018 RMD before the end of the year calculated on their own age as of 12/31/2018. This is referred to as separate account rule. Less beneficial is not creating the separate accounts in which case the 2018 beneficiary RMD for each would be based on the age of the oldest son. SInce beneficiary RMDs start in 2018, there is no way for one son to take the RMD for the other. Each must take their own RMD, except for the year of death decedent’s uncompleted RMD.

Submitted by Danny Harlow on Mon, 2018-03-26 23:09

The one beneficiary has pretty bad IRS problem, can they go after this inherited ROTH

Submitted by Alan - IRA critic on Mon, 2018-03-26 23:38

Yes, they could and also any retirement accounts owned by the beneficiary. Even in states with good IRA creditor protection, the accounts are not protected against IRS tax liens or marital settlements.

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