Inherited TIRA
My father passed away 3/14/2018.
His traditional IRA (TIRA) named his revocable trust as sole primary beneficiary.
I am the sole beneficiary and trustee of the revocable trust which is now the beneficial owner of the inherited TIRA.
I want to do a custodian-to-custodian transfer of the inherited TIRA from the TIRA custodian used by my father to the TIRA custodian I use.
Do I need to complete a RMD before making the custodian-to-custodian transfer of this inherited TIRA?
Thank you.
Permalink Submitted by Robert Wright on Wed, 2018-08-01 18:28
My understanding is that I need to complete an RMD from this inherited TIRA by 12-31-2019 (December 31 of the year following the year of death) and that I do not need to take an RMD before performing the custodian-to-custodian transfer this year. The RMD will be based on my life expectancy as of my age in 2019 (not my age in 2018; even though I inherited the TIRA in 2018 as the sole beneficiary of the trust). I am seeking to confirm my understanding is true.
Permalink Submitted by Alan - IRA critic on Wed, 2018-08-01 19:54
Yes, you are correct. The inherited IRA can be directly transferred to a new custodian anytime without taking an RMD. The transfer is not treated as a distribution and is not reported on Form 1099R or your tax return. You are also correct regarding your 2019 inherited IRA RMD calculation and due date providing that the trust meets the requirements for look through treatment. Those requirements include the trust becoming irrevocable upon your father’s death and that you provide copies of the trust info to the custodian no later than 10/31/2019. This info can be submitted to the current custodian before the transfer or to the second custodian after the transfer. The trust may or may not allow you to terminate the trust and assign the IRA to yourself as the individual beneficiary, but so doing will not change your RMD calculation. If the trust fails to be qualified for look through, the 5 year rule applies if your father passed prior to his required beginning date, and if he passed after that his remaining life expectancy will be used for your RMDs.
Permalink Submitted by Robert Wright on Wed, 2018-08-01 20:05
My father was older than 70 1/2 when he passed away.He was taking his annual RMD from this TIRA.He had not completed his 2018 RMD at the time of his death.Does his 2018 RMD need to be completed before his TIRA can be transferred to my inherited TIRA (i.e. RMDs cannot be rolled over)? Thanks again.
Permalink Submitted by Alan - IRA critic on Wed, 2018-08-01 20:10
A transfer is not a rollover. However, your father’s 2018 RMD is your responsibility to complete by 12/31/2018. You can do that before or after the transfer.
Permalink Submitted by Robert Wright on Wed, 2018-08-01 20:59
Thanks Alan, as always.