Inherited IRA 2 beneficiaries Missed deadline for RMD
Lisa inherited 4 IRA’s from her mother and 1 401K. Lisa is a 50/50 beneficiary with her sister. Mother died in 2006.
Lisa took a distribution out of 1 IRA pf $4K in 2007 and $400 in 2007 out of the 401K. The other 3 accounts have not been touched.
How should these accounts be rolled over?
I.E.-
Should the 2 accounts that had distributions be rolled into a seperate accounts 1 for the stretch and the other that must be distributed over 5 years?
Or can the accounts still be rolled over to an inherited IRA and the stretch distribution used is for the oldest sibling? Youngest sibling has never taken a distribution.
Permalink Submitted by Alan Spross on Sat, 2008-03-08 05:03
Since separate accounts for the IRA were not established by the 12/31/07 deadline, the RMDs for the IRA will remain based on the life expectancy of the oldest sister. Notwithstanding that, the separate accounts should still be created now, just for ease of handling. Each sister could combine these IRAs into one account and aggregate the RMDs since they were all inherited from the mother. The younger sister needs to take her RMDs for 2007 and beyond, and request that any excess accumulation penalty be excused for 2007 on Form 5329.
With respect to the 401k, it is also too late to transfer the account to an inherited IRA and use separate life expectancies, and RMDs will depend on when mother passed relative to her RBD. If prior to the RBD, the 5 year rule will apply, even if the transfer is made now to inherited IRA accounts.
Note that none of these accounts can be moved by rollover, they must be moved by direct trustee transfer.