Inheriting an Inherited IRA
Can someone please advise as to how I would proceed with opening accounts for beneficiaries of an inherited IRA – essentially 3 children are inheriting an inherited IRA.
The situation is as follows:
-Wife dies – her RMD would begin on 6/9/2017 based upon her age.
-Husband inherits – elects to stretch and take distributions over deceased wife’s life expectancy (rather than rollover and treat as his own).
-Husband dies and names his 3 grandchildren (all minors) as beneficiaries – 33.33% each.
How are/is the account(s) to be opened and titled? Will I open 3 separate accounts or just 1 account? Will the RMD be based on the wife’s life expectancy?
Permalink Submitted by Alan - IRA critic on Tue, 2016-03-29 22:09
Apparently, husband passed prior to the year his wife would have reached 70.5, and as the sole beneficiary he did not have to take any RMDs until that year. Even though he did, for purposes of the grandchildren he is treated as if he were the owner and they are treated as his designated beneficiaries. As designated beneficiaries, if they create separate inherited IRAs by the end of the year following the year of husband’s death they can each use their own single life expectancies for their RMDs. The title of these inherited IRAs should show both the names of the grandchild and the name of the husband. For example. “Ann Smith as beneficiary of James Smith”. If the IRA custodian wants this in reverse order, that is OK as well.