Inheriting an inherited IRA
Nancy has a beneficiary IRA that she received from her cousin William, Nancy passed away January 2, 2018. She listed her husband John as beneficiary. John wants to keep money in the IRA and not take a full distribution. My question is how would you go about titling this correctly? Secondly, Nancy did not satisfy her RMD for 2018 so I’m assuming John would need to take that before 12/31/18? Going forward we should use Williams life expectancy?
Permalink Submitted by Alan - IRA critic on Mon, 2018-08-20 23:54
The IRS prefers that the new title be “John as beneficiary of Nancy”, but if the IRA custodian wants to include William’s name as the original owner, that is OK as well. John does need to complete the proper RMD that Nancy would have taken for 2018 and must continue her RMD divisor schedule. His own age does not apply at all, and of course he cannot roll this over to his own IRA because his spouse was not the original owner, she was a beneficiary. It is also wise to check if Nancy was using the correct divisor for her RMDs. For example, if William passed after his RBD and Nancy is OLDER than William, her RMDs would use Williams younger age, not Nancy’s, and John would continue that.