My client is a daughter whose Dad was employed at a university and had a 403(b) plan at TIAA-CREF. Dad named his revocable living trust as beneficiary of the 403(b) plan accounts. The trust directs RMDs to be paid to Mom, and at her death to their 3 adult children (30% each) and 5 grandchildren (2% each). He died in March, 2004 at age 79. Dad’s trust qualified as a designated beneficiary trust. TIAA-CREF transferred his accounts into two “Savings and Investment Plan” accounts (their version of an inherited 403(b) account), one titled “Dad’s Name Nonmarital Trust” with Mom as Trustee and the other titled “Marital Trust under Dad’s Name Trust”, also with Mom as Trustee. RMDs were paid into two trust checking accounts and then fully distributed to Mom, who paid the income taxes on the distributions. Mom died in June, 2008. It has taken until now for TIAA-CREF to separate the two accounts into 8 separate accounts (also Savings and Investment Plan accounts that retain 403(b) status), one for each of the 3 adult children and the 5 grandchildren. We are in the process of establishing inherited IRAs at another brokerage firm for my client and her minor son. TIAA-CREF’s instructions for getting these transfers completed include establishing these IRAs as second generation IRAs, and that the registration needs to include Mom’s name and date of birth as the original beneficiary since her date of birth was used to calculate the RMDs to her.
My question is whether the inherited IRAs we are establishing are second generation IRAs or multi-generational IRAs and what factors determine the difference. Can each of the adult children and the grandchildren use their own life expectancies to calculate RMDs?
Louise