Beneficiary IRA Distribution
Client inherited an IRA from his father. He wants to take a partial distribution from the account now and leave the remainder in the account. Would a partial lump sum distribution prevent him from taking the balance as RMDs over his lifetime?
Permalink Submitted by Alan Spross on Fri, 2009-11-06 17:35
No. There is no maximum limit on his distributions. RMDs are excused for 2009, but will resume in 2010. Future RMDs will be reduced due to the large distribution. He might consider reducing the current distribution by the approximate amount of his 2010 RMD, and then take his 2010 RMD in January. This will help preserve at least some of the account balance.
He should check to see if his father ever made non deductible contributions to the IRA by checking his prior tax returns or asking the tax preparer if there is any evidence of these. He would inherit the remaining basis and it would make his distributions less than fully taxable. He also needs to remember that no rollovers are allowed, so one he takes money out of the account, it cannot be replaced or rolled over. The account can be moved by direct transfer only. Finally, he needs to name his own successor beneficiary to the account.