Successor Beneficiary + Can an inherited Simple IRA & IRA be combined?

Submitted by Amanda Minter on Sun, 2023-06-04 01:25

A brother passed away this year at age 62. His sister (turns 65 in December) inherited all of his accounts. Both siblings inherited IRA money in 2017 from their father, and are taking RMDs. The brother did not complete the annual RMD on that inherited account before his death.
Brother also has an IRA, Simple IRA and Roth of his own. We know the Roth must be kept separate, but:

1. Can the sister combine the Simple IRA and Trad IRA (both from brother) into one Beneficiary IRA account?
2. Please confirm that the sister is subject to the 10-year rule on the successor beneficiary IRA or how that is handled knowing the original owner passed away in 2017 and the brother was taking RMDs.
3. Is the sister subject to the 10-year term on the Simple and Trad IRA she inherited from her brother?

I am trying to reference my materials from Ed’s conference in Vegas (which was great!!!), and want to make sure I am interpreting correctly! Also from what I can ascertain, nothing has been finalized as to whether or not annual RMDs must be taken, correct?
Thank you so much for being such a great resource!!! You guys are MUCH appreciated!



Submitted by Alan - IRA critic on Sun, 2023-06-04 15:26

  1. Yes, the inherited SIMPLE and traditional IRAs can be combined by direct transfer as the RMD divisors are the same. Sister is an EDB, being not more than 10 years younger than brother and her first beneficiary RMD is due in 2024 using her age in 2024. She could also opt out of EDB treatment and into the 10 year rule if she wanted to. That would avoid annual RMDs in years 1-9, but would result in a large taxable distribution in year 10, so would probably not be a good plan to opt out of EDB treatment. 
  2. Yes, the 10 year rule will apply to the successor beneficiary accounts. The annual RMD schedule that brother was using must be continued in years 1-9 because their ages and father’s DOD indicate that father passed after his RBD. SIster must complete brother’s inherited IRA 2023 RMD that had not been completed.
  3. No, because she is an EDB. While an option, probably not a good choice to opt out of EDB treatment.
  4. IRS proposed Regs are still not final, but experts agree that they are highly unlikely to make further changes to the proposal, at least on beneficiary RMD rules.

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