inherited sep
My client is a 10% beneficiary of her sister’s SEP-IRA. Can she open an inherited IRA and what are the rules for doing that?
Thank you. Kathy P.
My client is a 10% beneficiary of her sister’s SEP-IRA. Can she open an inherited IRA and what are the rules for doing that?
Thank you. Kathy P.
Permalink Submitted by Alan Spross on Thu, 2010-06-17 01:34
Distribution and RMD rules for a SEP IRA are identical to any other TIRA account. Your client should create a separate inherited IRA account prior to the end of the year following the year of her sister’s death. She can then take RMDs based on her own non recalculated single life expectancy. Otherwise she will be stuck with the life expectancy of the oldest of all the beneficiaries.
If her sister passed after her RBD and had not satisfied her RMD requirements for the year of death or prior, the beneficiaries must take that RMD, preferably before the end of the year of death. All of the beneficiaries do not have to take 10% of that RMD as long as the full RMD is satisfied by some combination of the beneficiaries.