Inheriting an inherited IRA from non-spouse through estate
Client passed away this year with 2 investment accounts. One was a Traditional IRA in their own registration and the other was a traditional beneficiary IRA that they inherited several years ago (pre 2020) and were taking beneficiary RMDs. The client listed their “estate” as the beneficiary which leads to the client’s sister inheriting both accounts. Once the sister inherits both accounts we believe that the Traditional IRA will follow the 10yr rule for IRAs. Does the inherited beneficiary IRA also now follow the 10 yr rule or does it still follow the old required lifetime RMD payouts? We are unsure if the estate being named as the beneficiary (THEN to the client’s sister) will affect this at all?
Thank you!!!
Permalink Submitted by Alan - IRA critic on Tue, 2022-10-11 19:08
Permalink Submitted by Amanda Minter on Wed, 2022-10-12 20:32
Per your response above (thank you by the way!) we know the sister that inherited the client’s own Traditional IRA (client died in 2022 at age 68) is subject to 5 year rule. Are we understanding correctly that even though the inherited IRA (that was also left to the estate as the successor beneficiary) which also goes to the sister is subject to the 10 year rule…so although the estate is also beneficiary this one is 10-year rule vs 5-year rule? I am guessing maybe because it’s inherited IRA vs Trad IRA? Our main question is we know original owner of inherited IRA was 82 and passed away prior to 2020 and the original beneficiary was taking beneficiary RMD’s at their passing in 2022. What table does the sister use to calculate RMD’s and do she start her own 10 year period? Very confusing!!!
Permalink Submitted by Alan - IRA critic on Wed, 2022-10-12 23:55