client inheriting IRA and a Bene IRA

Submitted by Wendy Mommaerts on Wed, 2018-06-06 18:34

We have a client who is inheriting her dad’s IRA and also her dad’s bene IRA. I know that the rules are different when it comes to successor beneficiaries. Can you please confirm the following 3 scenarios:

Scenario 1

Dad (age 77 deceased 4/7/18) was the sole bene of mom’s (age 72 deceased 9/23/2015) IRA
Dad did not miss any RMD’s on his bene IRA
Successor benes will now have to follow dad’s RMD schedule

***Will our client have to establish two bene IRAs (one for dad’s traditional IRA and one for dad’s bene IRA)?

Scenario 2

Dad (age 77 deceased 4/7/18) was the sole bene of mom’s (age 72 deceased 9/23/2015) IRA
Dad missed one RMD on his bene IRA
Successor benes can treat their new bene IRA as the designated bene vs successor bene and stretch the RMD over their life expectancy?

Scenario 3

Dad (age 69 deceased 4/7//18) was the sole bene of mom’s (age 66 deceased 9/23/2015) IRA
Dad passed prior to his first RMD on his bene IRA
Successor benes can treat their new bene IRA as the designated bene vs successor bene and stretch the RMD over their life expectancy?

Am I missing anything within regards to successor benes?



Submitted by Alan - IRA critic on Wed, 2018-06-06 20:44

  1. Dad should have rolled the IRA inherited from Mom into his own, but it sounds like he kept taking the higher beneficiary RMDs and if so the successor beneficiaries will have to continue Dad’s RMD schedule using the divisor Dad would have used. Nonetheless, it should be verified that Dad did not fall short of any beneficiary IRA for 2016 or 2017 as that would have made him the owner and his beneficiaries could then use their own life expectancies. The inherited IRAs must be kept totally separate UNLESS client finds that Dad fell short of his beneficiary RMD an defaulted into ownership of that IRA.
  2. Yes, see above. 2018 cannot be treated as a year that Dad fell short of the beneficiary RMD because he passed before the due date for that RMD which would have been 12/31/2018.
  3. Yes, this is also correct. The applicable cite is IRS Reg. 1.401(a)(9)-3, QA 5.

Submitted by Wendy Mommaerts on Thu, 2018-06-07 13:27

Additional notes that need clarifying…Re: Scenerio 1:The successor beneficiaries will continue their dad’s RMD schedule..I’m under the impression that the successor beneficiaries must then reduce their divisor by 1.0 each year instead of re entering the table like a surviving spouse can?

Submitted by Alan - IRA critic on Thu, 2018-06-07 16:53

You are correct. For the year after  the death of the sole spousal beneficiary, the successor beneficiary will use the divisor that applied to the surviving spouse in the year of surviving spouse’s death, reduced by 1.0 with an additional 1.0 reduction for each year thereafter. In other words, the surviving spouse used “recalculation” but the successor beneficiary does not recalculate and applies the 1.0 reduction.

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