Inherited IRA and SEP IRA

Submitted by Ronal Tyler on Thu, 2018-11-29 17:34

I am the beneficiary of an inherited SEP IRA and have my own SEP IRA. This is the first year I must take the RMD from my SEP IRA. The RMD for the inherited IRA is $13,000.00 and $6,000.00 from my SEP IRA. Can I take the total RMD of $19,000.00 all from my beneficiary IRA? Thanks



Submitted by Alan - IRA critic on Thu, 2018-11-29 18:01

  • No, you cannot aggregate an inherited IRA RMD with an owned IRA RMD. However, if the inherited SEP IRA was from your deceased SPOUSE, you could elect to assume ownership of it and then combine it with your own SEP IRA and your RMDs would be smaller because the Uniform Table would apply to the total balance.
  • For a non spouse IRA beneficiary, you must use the single life table for RMDs which draws down the account faster than your own IRA to which the Uniform table applies. What you asked about is not allowed as it would result in drawing down the account with the higher rate of RMDs faster and preserving your own IRA balance. This would be a smart plan if it were allowed, but it is not allowed.
  • Note that for your own SEP IRA, if you reached 70.5 this year you can defer the 2018 RMD to as late as 4/1/2019, but if you did that you would have to take two RMDs in 2019. Nonetheless with some tax scenarios you would save taxes over the 2 year period by deferring all or part of the 2018 RMD to 2019. You would have to crunch the numbers to see if there is any benefit for deferring all or part of the 2018 owned SEP RMD to early 2019.

Add new comment

Log in or register to post comments