Non Spouse Beneficiary

Submitted by Mel Langer on Sat, 2020-03-21 23:56

Non Spouse Beneficiary inherits traditional IRA from father first, and then uncle shortly thereafter. Does she have to set up 2 separate inherited IRA’S? ( which I believe is necessary).

Or can she use the one set up when father died, to put uncle’s money into?

Thanks.



Submitted by David Mertz on Sun, 2020-03-22 00:00

Two separate inherited IRAs are required.

Submitted by Mel Langer on Sun, 2020-03-22 03:36

Thanks for the prompt response. What is the proper verbiage to use when setting up a non spouse inherited IRA?If account is set up incorrectly, and transferred improperly, does that mean all movement of the inherited IRA is considered a “distribution” and subject to ordinary income tax?

Submitted by David Mertz on Sun, 2020-03-22 12:33

  • The account needs to be flagged properly in the custodian’s system to identify it as an inherited IRA so that Forms 1099-R are coded properly.  The title on the account should indicate both the name of the decedent and the name of the beneficiary according to the custodian’s titling standards for inherited IRAs, such as “John Doe Sr., deceased, John Doe Jr., beneficiary.”
  • Movement of an IRA inherited by a non-spouse beneficiary can only be moved by non-reportable trustee-to-trustee transfer, never by and rollover of a distribution paid to the beneficiary.  If any amount is paid from the inherited IRA to the non-spouse beneficiary (a distribution), it cannot be rolled over and taxes will be due.

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