Inherited IRA
My client inherited an IRA from her ex husband (husband died age 68 May. 2016).
She transferred over the IRA to an Inherited IRA.
Now she has to take RMD from her inherited IRA. She would like to use the RMD amount to contribute to her own IRA and ROTH IRA. Would this cause any problem?
Permalink Submitted by Alan - IRA critic on Thu, 2017-01-05 22:48
If she otherwise qualifies for a regular IRA contribution, she can use the RMD money to fund the contribution. This cannot be a rollover as she must report the taxable income from the RMD. For the new contribution she must have earned income and meet the other requirements for the type of IRA she wants to contribute to.
Permalink Submitted by William Tuttle on Fri, 2017-01-06 02:53
If the above is true she would be better off assuming ownership of the IRA. This will also allow her beneficiaries to use their age for lifetime distributions
Permalink Submitted by Alan - IRA critic on Fri, 2017-01-06 04:18
Looking at this again, it is not clear whether they were married at IRA owner’s death or not. Both ex husband and husband are used in the same sentence. This needs to be clarified, and if they were married at the time of his death we also need to know her age at the end of 2016.
Permalink Submitted by William Tuttle on Fri, 2017-01-06 06:35
My brain just focused on the husband part.