Inherited IRAs
Mother passed away in 2024. Her IRA was split between her 2 kids (brother and sister) each of whom moved their respective portion into an Inherited IRA. The brother just passed away in 2025. He named his sister as the sole primary beneficiary of his Inherited IRA. Can the sister consolidate the brother’s Inherited IRA into the Inherited IRA she already has from her mother’s IRA or does she have to open a new one even though they both came from the same decedent? Hopefully that makes sense. Thanks in advance.
Permalink Submitted by Alan - IRA critic on Wed, 2025-03-19 10:55
The custodian will likely transfer the funds to a new inherited IRA anyway because the SSN on the account will change. Technically, the inherited IRA RMDs can only be aggregated if they are inherited directly from the same decedent and have the same RMD divisor.
In this case, sister must continue to use the brother’s divisor because she is a successor beneficiary and brother’s divisor was likely different than sister’s. Both the inherited IRAs must be drained by the end of 2034 as sister does not get a new 10 year period as brother was already subject to the 10 year rule.
I assume mother passed after RBD, and if so both of the inherited IRAs are subject to annual RMDs in years 1-9 of the 10 year rule, but because the divisors are different, the RMDs cannot be aggregated and the inherited IRAs must remain separate. The IRS has never indicated what would happen if a beneficiary combined ineligible inherited accounts, but the best outcome would be that the combined account would become subject to the greater of the two RMDs. Worst case would be that the combination created a taxable distribution and excess contribution to the remaining inherited account. Therefore, combining them would be rolling the dice.
Finally, if mother did not complete her 2024 RMD before passing, the beneficiaries are responsible for completing it this year. If brother did not take a distribution, sister will have to complete whatever was left of mother’s 2024 RMD and also brother’s beneficiary RMD for 2025 if he did not do so.