inherit an ira from deceased parent

Submitted by hank suskiewicz on Sat, 2013-01-05 17:25

If you are named bene of an IRA from a deceased parent ( 85 Yrs old and taking RMD’s) what are your options. The person is 48 yrs old.

Permalink Submitted by Alan - IRA critic on Sat, 2013-01-05 18:48

You should propertly title the account as an inherited IRA and then start RMDs using your life expectancy from Tab;e I in Pub 590. You would use your age as of 12/31 in the year following the year of parent’s death. For instance, if your age would be 49 at the end of that year, you would divide the prior year end balance by 35.1. Each year thereafter you reduce the divisor by 1.0, ie the following year would be 34.1, then 33.1 etc.
You must also complete the parent’s RMD for the year of death if it was not completed. You would have to know what the RMD was and how much of it remained at the time of death.
Check if parent had made non deductible contributions by looking for Form 8606 on the last tax return. The remaining amount of non deductible contributions is inherited by you and will make your RMDs partially tax free.
Name your own successor beneficiary ASAP.
MOST IMPORTANT: You cannot take a distribution and roll it over. If you get a check payable to you it will be taxable. If you want to change IRA custodians you need to do a direct trustee to trustee transfer.
Please advise if there were other beneficiaries named as well as yourself.