Inherited IRA with no beneficiary

Submitted by Amanda Minter on Wed, 2023-06-21 19:07

Hi there! Want to bounce this off of someone for clarification please.
Original owner died 4/2/2020 and was taking RMDs. IRA beneficiary was nephew (non EDB), who failed to name a beneficiary (so I assume beneficiary is now estate?) and passed away in January of this year without taking the RMD for 2023. His only heir is his sister who is now untangling his estate.

My question is since the sister is the only heir, does an inherited IRA in the name of the estate need to first be established, then can she transfer the assets from the estate’s inherited IRA to herself so she can close out the estate?
Will RMDs be based off of the brother’s remaining LE OR since left to estate is she subject to the 5 year rule?
Will RMD for 2023 need to be taken before transferring from the estate’s IRA?

Any guidance is appreciated! Thank you!



Submitted by Alan - IRA critic on Wed, 2023-06-21 19:35

  • Yes, an inherited IRA in the name of nephew’s estate needs to be established first, and then sister-executor can only hope that the IRA custodian will cooperate in her assigning the inherited IRA out of the estate to herself. If the IRA custodian will not cooperate in what is clearly an IRS allowed procedure, her only alternative is a direct transfer to another IRA custodian that will cooperate. If she has her own IRA at a larger institution, that custodian might be more willing to accept a transfer and assignment than others. The IRA custodian will probably try to force out a lump sum distribution to the estate, but that attempt should be resisted.
  • Since nephew was subject to annual RMDs within the 10 year rule, sister (or the estate) will still have to drain the inherited IRA in 2030, and continue’s annual RMD schedule.
  • Nephew’s 2023 RMD (year of death) must completed by sister or estate, and the deadline for that is the tax due date for 2023 plus extensions.

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