Re-Title an Inherited IRA

Submitted by Jeff crivello on Thu, 2015-07-30 18:55

Scenario: Client’s husbands died in 2005 was age 65. Husband’s 401k provider would only allow his account to transfer to an Inherited IRA as beneficiary of Michael. Client has not taken any distributions. Now she is 70.5 and needs to take RMD, but wants to retitle the account as her own IRA so she only has to take distributions based on her life exp.

Is there law that states she has the ability to re title to her own name? One company did it no questions asked, having trouble with second company.

Any Help is appreciated.



Submitted by Alan - IRA critic on Thu, 2015-07-30 19:23

  • Husband would have reached 70.5 around 2010, and with an inherited IRA client needed to begin beneficiary distributions in that year (2010 or 2011). There is a default rule that states that a sole surviving spouse that fails to take RMDs as a beneficiary defaults to ownership status of the IRA. Accordingly, technically she now owns the IRA and has owned it since 12/31 of the first year she did not take the beneficiary RMD. This works well for her, because being the owner prior to 70.5 means there was no RMDs due and she does not have to worry about a penalty for those years. Now that she is 70.5 she must begin RMDs, at least by her required beginning date.
  • This default rule is stated on p 5 of IRS Pub 590 B. But even if she HAD taken the beneficiary RMDs, she is always entitled at any time to roll an inherited IRA to her own IRA. This has been the rule for decades, so the second companies issues are mind boggling. She needs to talk to someone else there with some experience. Note that p 5 also indicates that a spousal beneficiary can take out a distribution from an inherited IRA and simply roll it over to her own IRA, at the same or different institution. But she cannot roll over an RMD, and this is an RMD year for her. She can roll over the amount in excess of the RMD.

Submitted by Jeff crivello on Thu, 2015-07-30 19:43

Great.  Thank you!

Add new comment

Log in or register to post comments