RMD
5 years ago, a client accidentally opened an inherited IRA when her husband passed away for his 401k accounts, instead of rolling them into her own IRA. She did not take an RMD during this time. She is now being told she has to fully distribute the account within the next month at the end of the 5-year period. Is this correct and is there anyway to fix it?
Permalink Submitted by Alan - IRA critic on Wed, 2021-11-17 01:11
This is not correct. All she has to do is elect to assume ownership of the inherited IRA before year end. In doing so she is deemed to have owned the IRA the entire year of 2021, and her 2021 and future RMDs would be based on her age with the Uniform Table. In fact, even if she does absolutely nothing this year and receives no distributions, she will default to ownership status as long as she is the sole beneficiary. An IRA custodian cannot force out distributions like a qualified plan administrator can do, so she should make sure that they know that she is not giving permission for any distribution from the inherited IRA. (Cite Reg 1.408-8, QA 5).