Non-Spouse Inherited IRA’s
Deceased has ‘two tier’ IRA annuity. The only way for the beneficiary to get the full value of the account is to take it as an annuity payment over 5 years.
The company is stating that the payee of the annuity payment can be the custodian of an inherited IRA, but it will be reported as taxable income to the beneficiary (I do not see how that would be). I know the 60 day rollover rule does not apply here.
If I can get a better answer on how the payments will be reported for tax purposes, then can an inherited IRA be established to accept the payments over the 5 years? Provided they are direct rollover/transfers to the inherited IRA.
Thank you.
Permalink Submitted by Alan - IRA critic on Fri, 2018-12-14 21:26
This already is an inherited IRA, an inherited IRA annuity. If another inherited IRA is opened that will accept annual direct transfers from the inherited IRA annuity, the transfers are not taxable, but the annual life expectancy RMDs can then be taken from the new inherited IRA. Of course, if the beneficiary does not care to stretch this over many years and will receive taxable distributions from the inherited IRA annuity, the beneficiary should be able to simply opt for the annual distribution to be distributed to the beneficiary. That will eliminate 5 years of transfers while calculating the annual beneficiary RMD using the total value of both inherited IRA accounts.