beneficiary IRA

Submitted by Jon Heller on Wed, 2019-03-06 17:01

I have a potential new client who wants to transfer a beneficiary IRA to me and here is the history
Brother Don and brother Dan as beneficiary of his IRA
Don dies Dan has inherited IRA of Don and starts taking RMD’s
Dan dies leaves it to his wife.
The account it titled Randa (WIFE) beneficiary of the Dan (spouse) IRA.
Question is when Dan died and Randa was beneficiary should this account of stayed in Don’s name as the decedent. Also do we need to take a RMD or because the titling is showing the spouse as the decedent we don’t need RMD. Thanks



Submitted by Alan - IRA critic on Wed, 2019-03-06 18:24

  • Once an account is inherited by a non spouse, it remains a non spouse inherited IRA. Once the RMD divisor is determined for the first non spouse beneficiary, that RMD divisor less 1.0 for each year thereafter continues no matter how many different people inherit the account. A successor beneficiary should determine if the year of death RMD was distributed by the prior beneficiary, and if not the successor beneficiary should make up that RMD. This only applies to the most recent beneficiary’s year of death RMD, it does not extend further back to prior beneficiaries or the original owner. Form 5329 should be filed to request a penalty waiver if the year of death RMD is taken late. The IRS will grant the waiver.
  • As for account titling, the IRS recommends “Randa, as beneficiary of Dan”. Other names need not be included in the inherited IRA title.

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