Inherited IRA Treatment
If a person has an inherited IRA from her father and then she passes away, what are the distribution options for her husband (he’s the beneficiary)? Must the IRA be paid out immediately or can the husband distribute over 5 years or his life expectancy based on the life expectancy table?
Permalink Submitted by Alan - IRA critic on Wed, 2014-04-16 16:53
Her husband must continue the same RMD schedule his wife was on. He cannot roll it over to his own or another IRA, but could change custodians if he wanted but only by direct trustee transfer. For RMDs, whatever his wife’s divisor was immediately prior to her death, the husband’s divisor for the following year will be 1.0 less than her last divisor. He must also complete the year of death RMD if she did not complete it. While unlikely, if his wife was using the 5 year rule, then he must also drain the IRA before the end of that period of time. Husband should retitle the inherited IRA if the following manner: ” (Name of husband) as beneficiary of (Name of wife)”, or perhaps the custodian’s processing platform will require a variation of that.