Inherited IRA questions
I have a client that inherited her son’s IRA and Roth-IRA accounts and I always have a way of mixing things up when in comes in inherited IRAs. Her son was under the age of 701/2 so he wasn’t taking RMDs, is it automatic in this situation that she takes distributions based on her life expectancy, which is currently 80 – she has been taking distributions for 10 yrs.
If so, does her inherited IRA count/included when calculating her total IRA distribution (she has her own IRA accounts), I sure it is but just checking.
She also has an inherited Roth-IRA which she is taking an RMD, of sorts. I am assuming that the Roth-IRA has to be account for, as a distribution goes, is that also calculated in the IRA distribution or it is treated differently because it is a Roth-IRA??
Permalink Submitted by Alan Spross on Thu, 2012-06-28 19:26
She must take a specific RMD from each of the following – Her own TIRA, her inherited TIRA, and her inherited Roth. The only RMDs that can be combined are those from her owned TIRAs if she has more than one of them.
Since her son passed prior to his RBD, she does NOT have the option to continue using HIS longer life expectancy as she would if he had passed after his RBD. Therefore, she must use her own life expectancy based on her attained age beginning in the year after his death. For example, if she will reach 81 by the end of the year following the year of his death, her initial divisor would be 9.7 and would be reduced by 1.0 each year thereafter. This will be a smaller divisor (larger % distribution) than she uses for her own IRAs. These non spouse RMDs must be taken separately, but the divisor would be the for her inherited Roth and inherited TIRA accounts. The difference in taxation is that her inherited Roth RMDs will typically be tax free.
Permalink Submitted by Eric Woodfill on Thu, 2012-06-28 19:37
Thank you very much