Multiple Beneficiaries
My wife and I are owners of non-spouse beneficiary IRAs. Since the original owner, her father, had already taken MRDs, we have to do the same using the Single Life Expectancy chart.
We have calculated the amounts each of us is required to take out, for MRDs.
I calculated my amount based on my age and the value, as of 12-31-09, of my Inherited IRA. My wife has done the same based on her age and the value of her Inherited IRA.
Can we take the entire sum of our required MRDs from only one of our Inherited IRAs? Or do we each have to take our distributions from each of our respectively owned Inherited IRA.
We file jointly, and we inherited the IRAs from the same person.
I’d appreciate any answers and references.
Thank you
Permalink Submitted by Alan Spross on Fri, 2010-04-16 02:32
You both must keep your inherited IRAs and RMD calculations separate even though you inherited them from the same decedent. The reason for that is that these IRAs remain individually beneficially owned by each of you and two different people cannot aggregate their RMDs. In the event that you inherited the same IRA and then created separate accounts by the deadline, your respective RMDs would be the same as if you inherited different IRA accounts. If you inherited the same IRA but did NOT create separate accounts by the deadline, each of your RMDs would be based on the oldest of you and your wife.
Subject to the above limitations, use the age each of you will attain on your birthday this year, not the age you may happen to be when you took the first distribution in 2010.
If his IRA had any basis from after tax contributions remaining at his death, you would each inherit a share of that basis based on your proportional share of the inherited value of all his IRAs including any that neither of you inherited. Whatever that basis would be would be reported on your own 8606 and could not be combined with any basis you might have in IRAs that you own.
In the unlikely event that you are older than her father, you could use his remaining life expectancy rather than your own single life expectancy. I know that is unlikely, but not impossible. This rule applies if decedent passed after his required beginning date.
On your joint 1040, combine the 1099R distribution amounts each of you will receive on lines 15a and 15b.
Permalink Submitted by Anonymous (not verified) on Fri, 2010-04-16 02:33
Each RMD must be taken from each Inherited IRA (I am sure someone will point to the reference).
I assume the IRA owner passed in 2009 and 2010 is the first year for an RMD? Otherwise you would not go to the chart. You only go the the chart in the first year and subtract one from that factor for subsequent years – non-recalculated.
pko
Permalink Submitted by Alan Spross on Fri, 2010-04-16 03:20
A reference that applies here is the following copy of Q&A 9 of Reg 1.408-8. As in most cases, the Regs will specify what CAN be done and not what cannot be done. However, this reference first refers to RMDs of an OWNER and then comments on beneficiary aggregation options for an INDIVIDUAL, none of which extends aggregation to two different beneficiaries:
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Q–9. Is the required minimum distribution from one IRA of an owner permitted to be distributed from another IRA in order to satisfy section 401(a)(9)?
A–9. Yes, the required minimum distribution must be calculated separately for each IRA. The separately calculated amounts may then be totaled and the total distribution taken from any one or more of the individual’s IRAs under the rules set forth in this A–9. Generally, only amounts in IRAs that an individual holds as the IRA owner may be aggregated. However, amounts in IRAs that an individual holds as a beneficiary of the same decedent and which are being distributed under the life expectancy rule in section 401(a)(9)(B)(iii) or (iv) may be aggregated, but such amounts may not be aggregated with amounts held in IRAs that the individual holds as the IRA owner or as the beneficiary of another decedent. Distributions from section 403(b) contracts or accounts will not satisfy the distribution requirements from IRAs, nor will distributions from IRAs satisfy the distribution requirements from section 403(b) contracts or accounts. Distributions from Roth IRAs (defined in section 408A) will not satisfy the distribution requirements applicable to IRAs or section 403(b) accounts or contracts and distributions from IRAs or section 403(b) contracts or accounts will not satisfy the distribution requirements from Roth IRAs.
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Permalink Submitted by Harvey Novack on Fri, 2010-04-16 11:19
Thanks for the info.
Logically, I would think that individuals could not mix their MRDs. But than, who says the tax system is logical.
If that was allowed, I would just take all the distributions from the account of the older owner. That would really stretch an IRA more so.
I just haven’t found any regulation on it.
Thanks