Inheriting an Inherited IRA
What are distribution rules for inheriting an inherited IRA?
Example: Mom dies and leaves IRA to son who creates inherited IRA. Son then dies and leaves the IRA to his daughter. Is there a 5 year rule for the daughter? I assume the “stretch” option disappears at this point?
Permalink Submitted by Alan - IRA critic on Wed, 2014-06-18 17:54
Daughter (successor beneficiary) must complete the distribution pattern used by the son. If son elected the 5 year rule, daughter must drain the account by the end of son’s 5 year period. If son was using life expectancy RMDs, the daughter must continue his schedule by using the divisor that applied to son in the year of sons death and continuing to reduce that divisor by 1.0 for each year thereafter. The inherited IRA should be titled showing only the daughter’s name as beneficiary and the son’s name as decedent. Mom’s name would no longer be included on the account.