Inherited IRA
My father-in-law decided to convert his Traditional IRA to a Roth last year. He began by converting $40,000 in 2010 and made my daughters the beneficiaries. Within several months, he died. A few questions: 1. When do they have to take distributions? 2. Can they stretch this inherited IRA over their lifetimes or do they need to take it all out in a specified period?
Permalink Submitted by Peter Lingane on Tue, 2011-01-18 00:21
Distributions can be stretched out over your daughters’ lifetimes. The details can be found of p. 68 of IRS Publication 590, which can be downloaded fro free from the IRS website. The 5-year requirement for tax free distributions applies although distributions are not subject to penalties because of your father-in-law’s death. It may be advisable to split the inherited IRA and it is imperative that the IRA continue to carry your father-in-law’s name with your daughters as beneficiaries.