Combining Two Bene IRAs with different decedents into one
Hello,
I have a question about the ability to combine two beneficiary IRAs into one. Here is the situation:
Husband (68 years old) and wife (55 years old). Husband has his own IRA and also a beneficiary IRA from his deceasaed father. Husband has been taking RMDs from his beneficiary IRA.
Husband is now deceased. Wife is younger than 59 1/2 and needs the IRA money to live on. We will transfer husband’s IRA into a beneficiary IRA for the wife.
Here’s the question: What do we do with the husband’s beneficiary IRA? Can we combine the husband’s beneficiary IRA (husband’s father is the decedent on this IRA) into the wife’s beneficiary IRA that the husband is decedent on?
Thank you for your help with this.
Mike
Permalink Submitted by mk foss on Wed, 2012-09-26 16:40
The two IRAs cannot be combined. The beneficiary IRA from the decedent’s father is paid out (with no penalties) to the surviving spouse using the same schedule that her late husband was using.
The surviving spouse can transfer her husband’s IRA to a beneficiary IRA and draw on it without penalty until she’s 59-1/2. At that point she can roll it over. Since the decedent was under 70-1/2 she will not be required to take distributions, but she can without penalty. There is no time limit on the rollover – no distributions are required until the year her spouse would have reached 70-1/2.
One of the mistakes that occurs is that the surviving spouse rolls over inherited benefits too soon. It looks like that will not happen here, proceeding with caution is the best course.
The RMD schedule for the IRA from the decedent’s father will cause higher payments. A good strategy may be for her to use that one up for her living expenses and wait to tap her late husband’s account in a couple of years when RMDs must begin.
Permalink Submitted by Mike Marangola on Wed, 2012-09-26 18:53
Thank you. I appreciate your help.