inherited ira
When the last spouce dies, the kids transfers the spouce account to an
inherited ira kids accoount. I been told that the kids will then have their rmd recalculated based on
their life expectency. They do not have to cash out their account. Is this correct?
Permalink Submitted by mk foss on Wed, 2012-03-14 16:49
I’m presuming that each spouse had named beneficiaries: spouse as primary and kids as contingent.
Then when first spouse dies, survivor rolls IRA to his/her name and takes distributions based on his/her life expectancy. Kids will be named primary beneficiaries.
When survivor passes away, kids have until 12/31 of year after death to transfer their share of survivor’s IRA to an inherited IRA/beneficiary IRA for themselves. The new IRA will have the name of the last parent to pass away and their name on it.
If this is done, each kid can use their own life expectancy for distributions. They could cash it in, but hopefully they would not – that’s what the parents hope for.