Inherited IRAs and the Once-Per-Year Rollover Rule: Today’s Slott Report Mailbag

Thursday, October 24, 2024

Sarah Brenner, JD
Director of Retirement Education

Question:

I disclaimed one of my spouse’s IRAs and it went to our two adult children. They are withdrawing RMDs from this account as well as contributing to their own Roth and IRA accounts. Are there any rules regarding whether the inherited required minimum distribution (RMD) must be taken prior to contributing to your own account?

Jeanne

Answer:

Hi Jeanne,

Taking distributions from an inherited IRA has no impact on your children’s ability to contribute to either a traditional or Roth IRA if they are otherwise eligible. They can even make their IRA contributions for the year before taking their RMDs from their inherited IRAs. There is no connection between taking the RMDs and making contributions to their own IRAs.

Question:

May a lump-sum payout of a pension, traditional IRA, a 403(b) account, and a 401(k) account all be rolled over into a single (the same) “Rollover IRA” account? The owner is the same for all. Would the once-per-year rollover rule be a concern?

Many thanks!

Answer:

Jim

Hi Jim,

All of these plan distributions can be rolled over to the same traditional IRA. That is not a problem. The once-per-year rollover rule is also not a concern because it only applies to rollovers between IRAs. It does not apply to plan-to-IRA rollovers.

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