Fidelity Inherited IRAs & Account Titling

Submitted by John L. on Tue, 2019-09-10 17:27

I need help understanding exactly how to “title” an account for a Fidelity Inherited IRA. This will be for taking an existing Fidelity Traditional IRA to a new Fidelity Inherited IRA for Non-Spouse Individuals.

I understand the “account title” should say something like “IRA FBO John Doe as beneficiary of Tom Doe.”

Nothing I’ve read explains exactly how you do this on the application. The Fidelity Inherited IRA for Non-Spouse Individuals application doesn’t have any place for an “Account Title.”

I’m getting the impression that Fidelity titles it, not me, based on the information I give them. Is that right? I’m pretty sure I don’t put “IRA FBO John Doe as beneficiary of Tom Doe” where it asks for my first name.

Instead, I think I have to correctly give them the name of the deceased owner, the date of death, the beneficiary (me), and make the right selections for Account Type (“Inherited IRA”) and Funding Method (“Transfer from deceased’s Fidelity IRA”).

That choice notes that all shares will then be “transferred in kind … to accounts selected in section 2” — the new Fidelity Inherited IRA. The other Funding Method options are to transfer from another firm or rollover a 401(k), neither of which apply to me.

Do I have this right? Fidelity titles it, but I have to give them the correct information to avoid mistakes?

Thank you for your time!



Submitted by Alan - IRA critic on Tue, 2019-09-10 18:23

  • You are right. Fidelity will title it according to their processing platform from the info you provide. The IRS does not care as long as both you and the decedent are identified in the title. You will have to provide a copy (maybe certified copy) of the death certificate with the completed form. 
  • Once the inherited IRA as been created, you need to determine if the deceased was subject to RMD for the year of death and if that RMD was completed. If not, you are responsible for completing the rest of the RMD by the end of that year. Your own beneficiary RMDs do not begin until the year following the year of death.
  • You should also attempt to determine if you inherited any IRA basis from non deductible contributions. If so, part of all your distributions will be non taxable, and you will have to file a Form 8606 each year to calculate the non taxable portion of your RMD or other distributions. 
  • Finally, if you want to move the inherited IRA to another custodian for whatever reason, you can only do do by a direct trustee transfer. If you receive a check made out to you, none of that can be rolled over using a 60 day rollover and you will owe taxes on the full amount distributed. This is a common and costly error for non spouse inherited IRA accounts.

Submitted by John L. on Tue, 2019-09-10 19:13

Alan, thank you so much for your reply. That was the last piece of the puzzle I didn’t understand. I’m comfortable with everything now. May I ask what your background is? Your long-time dedication to helping people here is really extraordinary. No problem if you don’t want to say. You have my highest respect. 

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