non spousal inherited IRA options
I have a client who inherited an IRA. The deceased owner was 78yrs old and taking RMD. My client is 71 yrs old. (neighbor) My questions are what are my options? I think one of them is the stretch but I need to understand the pros/cons and how to do it correctly.
Permalink Submitted by Alan Spross on Tue, 2009-08-11 03:30
Since your client is younger than the IRA owner, his best option is to take RMDs over his single, non recalculated life expectancy. Since the owner passed after his required beginning date, there is also an option to take RMDs over the remaining life expectancy of the IRA owner. But since he was 7 years older, that would just make the RMDs much larger than using your client’s own age in the year following the owner’s year of death. The 5 year rule does NOT apply here at all because the owner passed AFTER his RBD.
Also, remember that 2009 year RMDs have been waived. But if the owner passed in 2008 and did not take his RMD for the year of death, then your client needs to take out that RMD ASAP because it was a 2008 RMD. If owner died this year, then your client’s 2010 RMD does not have to be distributed until 12/31/2010 at the latest.