Beneficiary IRA question
I have done some research regarding the following and even spoke with rep from USAA where Bene IRA is held.
I just want to confirm this info.
My mother passed on 6/13/08. I rolled my share of her 401K into a beneficiary IRA with USAA. It is my understanding that I can take 5 years to withdraw the entire amount or to “stretch” the IRA with RMD’s that are to begin 12/31/2009.
Now I’m hearing about the 2009 waiver. Am I eligible to “wait” to begin my RMD’s until next year, as long as I make first RMD before 12/31/2010 ??
I know there was a waiver for 2009. I just want to make sure that also applies to someone who was to just begin there RMD’s in that year.
Thank you in advance for any help on this
Permalink Submitted by Alan Spross on Sat, 2009-08-22 21:40
Yes, the 2009 RMD waiver applies to all plans and to inherited accounts as well. Therefore, your first RMD is not due until 12/31/2010.
The 5 year rule option only applies if your mother passed prior to her required beginning date, which would have been April 1st of the year following the year she would have or did turn 70.5. If she passed after that date, there is no 5 year rule option. If you are eligible for the 5 year rule, note that 2009 does not count at all due to the waiver, so the 5 year rule would end on 12/31/2014. Of course, life expectancy is your best decision and you can keep that option open by taking life expectancy RMDs starting next year. You can always take more if you want to in any particular year.
As you will note from my post in your other thread, an inherited qualified plan can be converted to an inherited Roth by a non spouse. In this case, you cannot do that because you have already moved it to a traditional inherited IRA. However, due to the inconsistent treatment between IRAs and qualified plans for non spouse beneficiaries, it is quite possible that Congress will change the law to provide consistent treatment. That means there is a possibility that you could convert all or part of this inherited IRA at some later date IF the law is changed to provide that option. Note that even if the law is changed to provide for a Roth conversion, it would still be an inherited (not an owned) Roth and therefore would still be subject to annual RMDs for beneficiaries.