What are the options for an Inherited IRA on the death of the person who inherited that IRA?
The IRA was inherited from a daughter who also left an IRA to her Father, the wife has now passed away and the father is the beneficiary on the Inherited IRA from his spouse.
You can transfer it to another inherited IRA, but movement of funds does not change the RMD distribution schedule. The funds can only be moved by direct trustee transfer, and not by 60 day rollover. I doubt the daughter (original IRA owner) passed after her required beginning date, but if she did her father (and her mother after father’s death) could use the daughter’s life expectancy for RMDs since she had a longer life expectancy than he did. This can ONLY be done if daughter passed after her required beginning date for her own RMDs.
The daughter had not reached her RMD date before she passed away, far from it. Now its the mother that has passed and this will now pass to the Father. I assume he cannot roll the wifes Inherited IRA into his existing INherited IRA from the same daughter. Whose life expectancy will the RMDs from the Inherited Inherited IRA be based on?
You are correct, the father cannot roll the mother’s inherited IRA into his inherited IRA. The father would continue using the beneficiary election that the mother had chosen for that account, most likely the mother’s single life expectancy (reduction method).
Permalink Submitted by Jose Morales on Thu, 2014-03-27 15:46
To clarify, a daughter passed away leaving her IRA to her father and mother. The parents opened their own inherited IRAs and now the father passed away, naming his wife as the beneficiary? If this is correct, the wife will have to continue the beneficiary distributions as the husband had elected to take them. This was most likely using the husbands single life expectancy in the year after the daughter’s passing, reduced by 1 for each year thereafter.
Permalink Submitted by Stuart Cameron on Thu, 2014-03-27 17:42
Thanks for your reply. You are correct. As I understood, you cannot roll an Inherited IRA into another Inherited IRA.